The US SEC and Ripple Labs: A Prolonged Legal Battle

On April 8th, it was reported that the prolonged legal struggle between the US SEC and Ripple Labs is awaiting a summary judgment from the district court. However, a lawyer involved in the lawsuit stated that there may be a draw in the future. Lawyer Bill Morgan emphasized that the SEC’s own experts acknowledge that since mid-2018, the prices of the two major cryptocurrency assets, Bitcoin and Ethereum, can explain up to 90% of XRP price changes. At the same time, Ripple Labs’ high proportion of XRP holdings means that XRP Ledger (XRPL) is centralized, and the notion that XRP is a security still exists. Morgan added that due to various reasons, this will be an untenable proposition. However, the prices of most counterfeit coins are affected in a similar way.

Lawyer’s viewpoint: The SEC and Ripple lawsuit may end in a draw

The ongoing legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC) has made headlines in the cryptocurrency world for some time. On April 8th, it was reported that the district court is awaiting a summary judgment in the case, but is there potential for a draw in the future? This article delves deeper into the factors at play in this complex lawsuit.

The SEC vs Ripple Labs

The SEC filed a lawsuit against Ripple Labs, its CEO Brad Garlinghouse, and its executive chairman Chris Larsen in December 2020. The agency alleges that Ripple Labs carried out an unregistered securities offering worth $1.3 billion by selling XRP to retail investors. According to the SEC, XRP is a security and not a currency, which would make it subject to stringent regulatory requirements.
Ripple Labs, however, has consistently maintained that XRP is a currency on par with Bitcoin and Ethereum. The company argues that XRP is decentralized, which means that it is not controlled by a single entity. Ripple Labs also claims that XRP is primarily used for cross-border payments and remittances, rather than as an investment.

The Impact of Bitcoin and Ethereum on XRP

The lawyer Bill Morgan, who is involved in the SEC-Ripple Labs lawsuit, has stated that the prices of Bitcoin and Ethereum have a significant impact on XRP price changes. He cites the SEC’s own experts, who have acknowledged that since mid-2018, Bitcoin and Ethereum can explain up to 90% of XRP price changes.
At the same time, Ripple Labs holds a high proportion of XRP, which means that XRP Ledger (XRPL) is centralized. As a result, the notion that XRP is a security still exists. Morgan argues that due to various reasons, this will be an untenable proposition.

Counterfeit Coins and Ripple Labs

Morgan also notes that the prices of most counterfeit coins are affected in a similar way to XRP. This raises the question of whether XRP is being unfairly targeted by the SEC, while other cryptocurrencies that are more similar to securities are not facing the same scrutiny.
There is no doubt that the outcome of the SEC-Ripple Labs lawsuit will have far-reaching implications for the cryptocurrency industry. If the court rules in favor of the SEC, it could set a precedent for how other cryptocurrencies are regulated in the US. On the other hand, if Ripple Labs is successful, it could provide greater clarity and regulatory certainty for the cryptocurrency market.

Conclusion

The legal battle between the US SEC and Ripple Labs over the classification of XRP as a currency or a security is complex and involves multiple factors. The impact of Bitcoin and Ethereum on XRP price changes, the centralization of XRPL, and the question of unfair targeting by the SEC are all important factors that will shape the future of the cryptocurrency industry.

FAQs

1. What is the SEC-Ripple Labs lawsuit about?
The SEC alleges that Ripple Labs carried out an unregistered securities offering worth $1.3 billion by selling XRP to retail investors. Ripple Labs maintains that XRP is a currency, not a security.
2. What impact do Bitcoin and Ethereum have on XRP?
According to the SEC’s own experts, since mid-2018, Bitcoin and Ethereum can explain up to 90% of XRP price changes.
3. What are the implications of the SEC-Ripple Labs lawsuit for the cryptocurrency industry?
The outcome of the lawsuit could set a precedent for how other cryptocurrencies are regulated in the US and provide greater clarity and regulatory certainty for the market.