Ripple v. SEC Litigation Update as of February 27, 2023

by Arthur · February 27, 2023

Despite both parties in the Ripple and Securities Exchnage Commission (SEC) case having filed final filings and awaiting summary judgment, the main focus remains around the regulator’s power to provide oversight of crypto alongside revoking vital documents.

During the latest update, pro-XRP attorney John Deaton has questioned a statement by SEC Chairman Gary Gensler claiming that any crypto besides Bitcoin (BTC) is classified as a security. It is worth noting that the SEC uses Ripple to sell XRP as unregistered securities.

In a chirping On February 27, Deaton stated that there is no consensus regarding securities classification. He made the remarks in response to a comment by MicroStrategy Executive Chairman Michael Saylor who noted that Gensler’s remarks are testimony to the consensus building on the classification of securities.

Right. Outside @GaryGenslerits 🧠 and #BTC Maxis, there is no consensus on everything but #Bitcoin is a security. There is absolutely no consensus in the legal community. Software code is NOT a security. It, like any other asset, can be offered and sold as collateral. https://t.co/MokmwLr7Ok

— John E Deaton (@JohnEDeaton1) 27 February 2023

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Possibility of settlement

Previously, Deaton shared possible arrangements for both parties to settle even while awaiting the summary judgment. According to Deaton, Ripple would pay 100-250 million dollars in a settlement if the regulator accepts that current and future sales of XRP are not classified as securities.

However, he cautioned that the likelihood of the SEC accepting the approach was minimal, given the agency’s increased crackdown on the digital asset space. Deaton pointed out that the presiding judge could clarify XRP’s secondary sales in this case.

It is worth noting that Ripple General Counsel Stuart Alderoty had previously insinuated that the SEC has minimal chances of winning the case at the Supreme Court based on historical outcomes.

“The SEC has lost 4 of its last 5 cases in the Supreme Court, thanks to the few who had the courage and resources to fight back against the SEC’s bullying and clinging to stretching legal positions that were not faithful to the law,” he said.

Repeal of Hinaman documents

As previously reported, the case received new rejuvenation after a journalist, Roslyn Layton, filed a motion to gain access to Hinman’s speech records. The speech was given by the former director of the SEC’s Division of Corporate Finance in June 2018 and was able to provide a clear representation of how the SEC classifies securities. Hinman noted that Ethereum (ETH) and Bitcoin are not securities, and the same approach can be applied to XRP.

Therefore, with Chairman Gensler pointing out that Bitcoin alone is not a security, the repeal of the document becomes a significant part of the case.

Layton’s proposal has also received support from US government watchdog Empower Oversight.

Elsewhere, defense attorney James Filan also revealed a new development in another long-running legal battle in which Ripple has faced a class-action lawsuit since 2018. In the case filed in California, XRP investors sued the company and its CEO, Brad Garlinghouse, for selling XRP as an unregistered securities and seek compensation for the losses they have suffered. They are asking the court to declare XRP as a security.

As reported by Finbold, Deaton had filed a motion to join the case as an amicus brief. In the latest update, the plaintiffs filed a new motion opposing Deaton’s plea to be included in the case.