The ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) over the classification of XRP as a security has captured the attention of the cryptocurrency industry. The latest development in this high-stakes case is Ripple's opposition to the SEC's motion to certify an interlocutory appeal. This move marks another chapter in the struggle between regulators and the cryptocurrency sector, as both sides seek to clarify the legal status of digital assets.
As the legal battle between Ripple and the SEC continues, a pro-XRP lawyer named John Deaton, representing numerous XRP tokenholders, has shed light on possible avenues for resolution should the two parties decide to settle. Deaton's insights come amid growing speculation about the direction this landmark case might take.
The recent argument brought forward by Ripple had a slight positive impact on the remittance token’s price over the past 24 hours. Despite the positive daily performance, however, the altcoin’s price was still down for the week. Nevertheless, XRP’s price may continue to climb given the fact that it was attempting to flip the 9-day EMAA line into support at press time.
The legal dispute dates back to December 2020 when the SEC initiated legal proceedings against Ripple, alleging that a significant portion of the transactions involving XRP over an eight-year period were, in fact, investment contracts or securities. The SEC's case has been a focal point in its strategy to oversee the U.S. cryptocurrency market on a case-by-case basis, rather than through comprehensive regulatory measures. This approach has stirred debates and discussions about the regulatory framework surrounding digital assets.
Interlocutory Appeal and Ripple's Opposition
A significant turning point in the case occurred when Judge Torres granted the SEC's request for an interlocutory appeal, a legal procedure that allows an appeal to be filed before the conclusion of the trial. The SEC aimed to appeal what it referred to as a "purely legal question" that could impact future digital asset cases. The regulatory body sought certification for an immediate appeal, accompanied by a stay to halt the proceedings until the Second Circuit's resolution of the appeal.
On 1 September 2023, Ripple responded to the SEC's motion with a strongly-worded opposition. Ripple's legal team argued that the SEC's motion did not adhere to the criteria required for certification of an interlocutory appeal. Ripple highlighted three essential conditions that need to be met for such certification:
Pure or Controlling Question of Law: Ripple pointed out that the SEC had failed to establish that the issue at hand meets the criterion of a pure or controlling question of law. This implies that the matter should hinge primarily on legal interpretation rather than factual disputes.
Substantial Ground for Difference of Opinion: Ripple contended that the SEC's motion failed to demonstrate a substantial difference of opinion among courts regarding the proposed legal questions. The defendant argued that conflicting legal interpretations among courts are necessary to justify an interlocutory appeal.
Material Advancement of Termination: Ripple highlighted that the immediate appeal should significantly contribute to the ultimate resolution of the litigation. The defendant suggested that interlocutory appeals are generally unnecessary when they would not lead to the conclusion of the ongoing litigation.
Ripple's Stance and Implications
Ripple's opposition to the SEC's motion demonstrates the company's firm belief that the regulatory body's claims lack legal merit and that the conditions for an interlocutory appeal have not been met. By highlighting the requirements for certification, Ripple is signaling its confidence in the strength of its legal defense and the merit of its arguments against the SEC's allegations.
The outcome of this legal battle has far-reaching implications for the broader cryptocurrency industry, since the case has raised questions about the classification of digital assets and whether they should be treated as securities under existing regulations. A favorable ruling for Ripple could potentially set a precedent that shapes the regulatory landscape for other cryptocurrencies, providing more clarity for investors, developers, and companies operating in the space.
Potential Settlement Scenarios Emerge in Ripple-SEC Legal Battle
Meanwhile, a pro-XRP lawyer named John Deaton, representing numerous XRP tokenholders, has shed light on possible avenues for resolution should the two parties decide to settle. Deaton's insights come amid growing speculation about the direction this landmark case might take.
Central Role of Coinbase vs. SEC Lawsuit
Deaton emphasized the importance of the ongoing Coinbase vs. SEC lawsuit and its potential impact on the Ripple-SEC case. He explained that if the judge overseeing the Coinbase case were to grant the exchange's motion to dismiss, it would signify that token sales conducted on exchanges might not be subject to U.S. securities laws. This interpretation, however, would not necessarily extend to other aspects of the cryptocurrency landscape, such as cryptocurrency staking.
In Deaton's own words:
"The only way Ripple and the SEC (could) settle before the end of the year is if Judge Failla grants the Coinbase motion to dismiss or partially grants it – finding token sales on an exchange in a blind bid/ask transaction do not fall under U.S. securities laws."
Implications of Motion to Dismiss
If the motion to dismiss were to be approved, the SEC's options for pursuing an appeal would be significantly limited. This would potentially make a settlement a more attractive and logical choice for both Ripple and the regulatory body. Deaton pointed out that even if the SEC were to attempt an appeal, its authority and grounds for appeal would be compromised.
The ongoing lawsuit between Ripple and the SEC lawsuit led to several cryptocurrency exchanges delisting XRP to avoid potential legal complications. However, the positive ruling by Judge Analisa Torres in July of this year prompted numerous exchanges to consider relisting the token.
Throughout 2023, the SEC has intensified its regulatory scrutiny of various cryptocurrency firms, including high-profile platforms like Binance and Coinbase. Notably, asset manager Grayscale achieved a legal victory against the SEC on 29 August 2023 through an appeal, mandating a review of its application for a Bitcoin exchange-traded fund (ETF).
At press time, the cryptocurrency price tracking website CoinStats indicated that XRP was trading hands at $0.510832 after it posted a 24-hour gain of 1.9%. Meanwhile, the remittance token’s weekly performance, however, remained in the red zone at -1.75%.
Price chart for XRP (Source: CoinStats)
The altcoin also displayed similar strength against the market leader Bitcoin (BTC), which saw its market dominance drop 0.02% during the previous 24 hours. Subsequently, XRP was up 1.44% against the leading cryptocurrency, which meant that 1 XRP token was estimated to be worth 0.00001966 BTC.
Daily chart for XRP/USDT (Source: TradingView)
From a technical standpoint, XRP’s price printed a higher low over the past few days, resulting in the formation of a positive trend line on its daily chart. Furthermore, the altcoin’s price had been in a positive sequence for the past 3 days. Subsequently, XRP’s price was attempting to break above the 9-day EMA line at around $0.5139.
If it is able to overcome the technical indicator, then it will most likely attempt to flip the resistance level at $0.5380 into support as well, which is also around the same level as the 20-day EMA line. A daily candle close above this threshold will then clear a path for XRP’s price to continue to rise to the next major barrier at $0.5890 over the following few days if bulls continue to offer their support to the altcoin. This bullish momentum could also lead to XRP’s price reaching $0.6405 if the momentum is strong enough to overcome the potential profit-taking activities in the coming 2 weeks.
On the other hand, a rejection from the 9-day EMA line today may lead to XRP’s price pulling back to retest the positive trend line that had formed on its charts. If XRP breaks below this level, then it may put the cryptocurrency at risk of dropping to the next crucial support level at $0.4715 in the following few days.
Disclaimer: Coinpaper does not recommend that any cryptocurrency should be bought, sold, or held by you. Always conduct your own research and consult your financial advisor before investing in any digital asset.