In a significant development for the U.S. Securities and Exchange Commission (SEC) versus Ripple legal battle, Judge Analisa Torres has terminated the ongoing proceedings and established a new deadline for discussing potential remedies concerning XRP’s institutional sales.
This development came to light via a letter dated October 24, 2023, sent by the SEC to Judge Torres. Notably, the letter highlighted the dismissal of the SEC’s claims against Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen. These individuals had been facing allegations that they aided and abetted Ripple’s violations of Section 5 of the Securities Act of 1933 concerning Ripple’s institutional sales of XRP.
Judge Torres’s July 13, 2023 Order had set the stage for a trial on these claims. Still, in accordance with the Federal Rules of Civil Procedure, both parties agreed to voluntarily dismiss this claim last week, thereby eliminating the need for a scheduled trial.
The SEC and Ripple plan to discuss potential remedies for Ripple’s Section 5 violations related to its Institutional Sales of XRP. In the letter, they requested until November 9, 2023, to propose a briefing schedule for these discussions. Notably, Judge Torres granted this request, setting the deadline for both parties to submit a joint briefing schedule on remedies.
However, per the letter, if an agreement cannot be reached on the set deadline, they “shall jointly request that the Court set a briefing schedule.” Consequently, the judge also adjourned the final pretrial conference originally scheduled for April 16, 2024, and the trial set for April 23, 2024, indefinitely to allow for the negotiations.
That said, the heart of this matter lies in the classification of XRP, with the SEC considering it a security that should have been registered before being sold to institutional investors. This decision has stirred controversy, with Ripple supporters hoping the company will contest these allegations, as Judge Torres had ruled that XRP is not a security.
Earlier this week, attorney John Deaton argued that SEC’s early dismissal of the lawsuit against Ripple executives is seen as a means to expedite the legal process, allowing for a quicker appeal rather than waiting for the scheduled spring 2024 trial.
According to him, the key point of contention now centres around determining restitution for Ripple’s substantial $700+ million in institutional XRP sales. Deaton further suggested that negotiations over this substantial sum are likely to extend beyond the remaining eight months of 2023, indicating that an SEC appeal may not happen this year.
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