In the never-ending saga that is the lawsuit between the United States Securities and Exchange Commission (SEC) and Ripple, new developments keep observers guessing what’s next. With a pending response by Ripple to the SEC’s filing requesting permission to lodge an interlocutory appeal regarding programmatic and other sales of XRP, the San Francisco company has now presented its readiness for a trial to Judge Torres.
Judge Torres moved to trial the question of whether Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen ‘aided and abetted’ Ripple in violating securities laws. Recall that the Judge said XRP in itself is not a security but the sales by Ripple to institutional investors was.
In a formal filing from August 23, Ripple’s lawyers responded to the Court’s request about availability for trial in the second quarter of 2024, saying Ripple was fully available without any blackout dates.
Yassin Mobarak, founder and managing member of venture capital firm Dizer Capital and avid blockchain commentator, said he would bet the trial would never eventuate. He argues that the SEC would not “risk Ripple calling to the stand Bill Hinman, Jay Clayton, and other current and former SEC officials,” he stated on social platform X.
Adding that the SEC would not want ordinary citizens to judge SEC practices, he said that the SEC was using delay tactics hoping to stall proceedings and may, in the end, have to withdraw their allegations against Ripple’s executives.
Mobarak has questioned SEC motives in the past, when he said back in 2023 that he found it strange the SEC spared Stellar and XLM while suing Ripple. Notably, Stellar founder Jed McCaleb was also a co-founder of Ripple, yet was excluded in the lawsuit.
Crypto Lawyer Believes in Possibility of Settlement
Crypto lawyer Fred Rispoli weighed in and agreed that there was a chance the trial wouldn’t go ahead. Rispoli argues the SEC used the individual’s lawsuits to force Ripple into a settlement. Settlement is one of the most likely outcomes of SEC enforcement action, but Ripple chose to take up the fight.
Rispoli said he finds the idea amusing to see former SEC director of corporation finance Bill Hinman and former SEC chair Jay Clayton in the witness stand. Clayton brought the lawsuit against Ripple on his last day in office before he handed it over to the current chair, Gary Gensler.
Hinman has achieved a level of notoriety in the crypto community for the Hinman emails and a speech that is blamed for causing great confusion. Ripple legal chief Stuart Alderoty said, “his speech contained made-up analysis with no basis in law” when Hinman declared Ether not a security, apparently against the advice of SEC lawyers.
As for the trial in 2024, Rispoli thinks the SEC is inundated with work with several trials and would want to opt for an appeal. He said, “It has no bargaining chips left if J. Torres denies it. SEC went all in and if this Hail Mary doesn’t work, well, it will be interesting to see how exactly SEC tries to structure its loss.”
With so many things uncertain in the SEC vs. Ripple case, hopefully, the next few weeks will bring some clarity and resolution to the regulatory uncertainties surrounding cryptocurrency and its use in the financial system.
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