Lawyers Believe Ripple May Lose Case With SEC, Chevron Ruling Unimportant
Ripple’s legal counsel, in its latest development, has asserted that the SEC is winning in its ongoing court case. The cryptocurrency community has been interested in this development and speculating on what it might mean for Ripple’s XRP asset.
The SEC’s case hinges on XRP being categorized as a security, subjecting it to stricter legal guidelines. Ripple, however, argues that XRP shouldn’t fall under the SEC’s jurisdiction because it is a digital currency rather than a security. The legal team representing Ripple conceded in recent court documents that the case was trending in the SEC’s favor.
This statement took many by surprise because Ripple had previously expressed confidence in its legal strategy and the likelihood of a successful resolution. The decision by Judge Torres on the status of XRP as a security, which is categorized as secondary, and programmatic sales are almost the same as the SEC vs. Binance case presided over by Judge Jackson.
Ripple Legal Team Says XRP Doesn’t Fit Into Howey Test Requirement
The documents needed to clearly explain why Ripple’s attorneys feel the case is leaning toward the SEC, leaving an opportunity for conjecture. Applying the Howey Test has been one of the main points of contention in the case.
The Howey Test determines if funds have been invested in a joint venture with the primary goal of making money off the labor of others. According to Ripple’s legal team, XRP does not fit these requirements. The United States Supreme Court’s recent decision on Chevron deference, which has generated much debate in the regulatory community, has added to the complexity.
Courts can accept a government agency’s interpretation of vague statutes under the Chevron theory. Ripple’s attorneys, however, have discounted the significance of this decision for their lawsuit, contending that precise legal standards, not regulatory interpretation, should determine how XRP is classified.
As a result of Ripple’s legal team’s admission that the SEC is winning the case, XRP holders and the larger cryptocurrency community are feeling uneasy and concerned. If the court rules in favor of the SEC, XRP might be categorized as a security, which would significantly impact Ripple’s business practices and the cryptocurrency industry at large.
Price of XRP Drops After Announcement, As Ripple Reaffirms Its Position
If the SEC wins, Ripple would have to pay hefty fines and possibly register XRP as a security, putting it under regulatory watch and needing to comply with rules. After the announcement, the price of XRP dropped as investors considered the possible regulatory ramifications. Ripple has reaffirmed its dedication to upholding its position and protecting the interests of its users.
A former SEC lawyer, James Farrell, believes that the SEC is in a better position to remedy the situation, insisting that Judge Torres is aware of the $770 million worth of XRP sales contrary to securities laws. The current legal tussle borders around the share amount in percentage from the sales Ripple should pay the SEC. This includes a penalty and a review if Ripple has violated any law.
The argument becomes much more complicated due to the elimination of the significance of the Chevron ruling. The outcome will significantly impact Ripple, XRP, and the larger cryptocurrency market as the procedures advance.
Former SEC Lawyer Comments, Cites Chevron Case
Barr. Marc Fagel (retired), a lawyer for the SEC, in his recent post on X, made it clear that the ruling by the Supreme Court on the Chevron case also applies to making rules by the required government agency. There would only be implications if the SEC enforced the actions. Marc also added that the courts may disagree with an agency involved in the case should a contradicting statute exist.
Marc cleared the air on what to expect from the court. He revealed that courts are known to decide for themselves, and it doesn’t matter if the defendant went contrary to the stipulated law; hence, it doesn’t make any difference for the SEC. He clearly stated that the widespread speculation by the media wasn’t why Judge Torres issued a conflicting summary of the judgment.
He said the judge did not get in the way of the SEC either. However, no implication is meted by the XRP lawsuit regarding the Chevron deference. Judge Torres has gone ahead and waived the claim by the United States SEC on Binance’s idea of BNB secondary sales, specifying that the secondary sales of these assets don’t make it a type of security according to the Howey Test.
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