Recent opinions regarding the dispute between the Securities Exchange Commision (SEC) and Ripple Labs, whose US$15bln XRP token ranks as the 7th largest by market capitalisation, suggests that the digital payment network is edging closer to outright victory in the long-running saga.
Ripple had already won big in the months prior, when Judge Sarah Netburn of the United States District Court ordered SEC as the plaintiff to release email documents to Ripple which the SEC had attempted to cloak under attorney-client privilege.
Judge Netburn also expressed frustration at the SEC’s inconsistent statements and is now poised to rule for or against the SEC’s latest appeal to the forced disclosure of the so-called Hinman Emails.
Jeremy Hogan, managing partner of Hogan & Hogan, who has been closely following the case, Tweeted that he expects a ruling by week ending July 10.
Hogan has consistently maintained that XRP cannot be labelled as a security, while Ripple’s multitude of wins before the court bodes well for the company.
The dispute goes back to December 2020, when the SEC accused Ripple of raising over $1.3 billion through an unregistered, ongoing digital asset securities offering.
Key to Ripple’s defence are statements made by former Director of the SEC's Division of Corporation Finance William Hinman, who expressed his opinion that Ethereum is in fact not a security at the 2018 Yahoo! All Markets Summit.
Gary Gensler, current SEC chairman, recently refuted this on CNBC, stating that only Bitcoin can be considered a commodity and reiterating his point that all other altcoins fall under the purview of the SEC.
Regardless of the ruling on the SEC’s latest appeal, the case is expected to continue for a while yet, although Ripple Labs.
An eventual ruling in favour of the SEC could have drastic consequences not just for Ripple Labs, but for the cryptocurrency market as a whole, not to mention a likely bull run on the value of XRP.
Should it be determined that XRP is in fact a security, as the SEC contends, investment contracts would need to be provided for each and every purchase of the token, a compliance burden great enough to suffocate the company.