The ongoing legal battle between Ripple Labs and the US Security and Exchange Commission (SEC) has witnessed a development recently. The court has ordered both parties to agree on potential dates for the settlement conference. This discussion follows the most recent declaration involving the XRP cryptocurrency not being a security. The cryptocurrency community patiently awaits the outcome of this, expecting to achieve some clarity and stability in the crypto world.
SEC’s Allegation Against Ripple
The legal proceedings between Ripple Labs and the Security and Exchange Commission (SEC) have been in progress since December 2020. It started with the regulatory body filing a case against Ripple alleging that the sale of ERP tokens by Ripple was an unregistered securities offering. The lawsuit against Ripple along with its two primary executives, Brad Garlinghouse and Chris Larsen, hovered around the fact that XRP should be classified as security subject to the same regulation as traditional stocks and bonds.
These allegations have significantly affected the market condition of XRP, delisting it from several cryptocurrency exchanges.
Ripple Lab’s Defense
In response to the SEC’s accusations, Ripple raised its hand on any wrongdoing and stated that XRP is a digital asset and not a security. The company also showcased its commitment to regulatory compliance and its cooperation with financial institutions around the world. However, this put no end to the legal battle and continued affecting the reputation of XRP as one of the most favorable coins in the cryptocurrency ecosystem.
Court Intervention in Ripple-SEC Legal Battle
The case dragged on for several months until the ruling on the 13th of July by the US District Court Judge Analisa Torres declared that the XRP token associated with Ripple Labs does not meet the criteria under Howey Test.
The Howey test is a legal test used in the US to qualify a transaction as an investment contract under federal law. The investment contract should possess three important features:
- A financial investment where the participant are risking their own money
- A common enterprise wherein the investor’s financial gains are intertwined
- A reasonable expectation of profits from someone else as a return on the investment
Post Judge Analisa Torres’ ruling, US Magistrate Judge Sarah Netburn issued an order on the 17th of July for the settlement conference between the two parties. Ripple and the SEC must come to a common agreement 6-8 weeks before the conference. As per the court’s order on the mandate discussion, the involved parties should come up with three mutually agreeable dates. The idea behind this is to allow the parties to explore a few settlement options that suit both.
Eleanor Terret, IFox Business Journalist says that the settlement is a major turning point in the Ripple-SEC case. The first victory of XRP can be categorized as a partial one considering the settlement conference lined up next. It remains uncertain how the settlement unfolds either leading to a full closure or a partial one, again.
The cryptocurrency community remains rattled as it eagerly awaits the outcomes of the case. Undoubtedly, the resolution of this case will have a profound influence on the current and future state of digital assets within the United States. Nevertheless, the community remains optimistic that the outcome continues to catalyze the innovations leading to unprecedented growth in the crypto space.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
