Crypto lawyers predict SEC will lose lawsuit against Ripple

Legal experts say a US-based blockchain company Ripple is likely to win the long war with US Securities and Exchange Commission (SEC), claiming that the agency may have shot itself in the foot.

Some legal observers suggested the agency completely failed to prove its case, according to a Forbes report. A major reason for its downfall could have been the thousands of retail XRP holders who became involved in the case: although they were unable to be included as defendants along with Ripple, the judge allowed them to file amicus briefs so that their voices would be heard as we want.

Attorney Jeremy Hogan was quoted as saying:

“The SEC can only prevail on its summary judgment if judgment [Analisa] Torres “forgets his first year of law school”.”

Furthermore, well-known legal experts, namely Curt Levey from Federalist Society and Professor JW Verret of George Mason University’s Scalia School of Lawargue that,

“Ripple is on track to win this case.”

And that’s not all. Verret said that should the SEC decide to appeal to the Supreme Court,

“It will likely not only lose, but set a sweeping precedent that will limit or completely eliminate the application of Howey to cryptocurrencies, which defy the 1946 definitions.”

The Howey test refers to the US Supreme Court case to determine whether a transaction qualifies as an “investment contract”, and therefore a security.

According to Forbes,

“The ruling could drastically limit the SEC’s authority to regulate crypto in the US. If that’s how it ends up, it will have been a self-inflicted disaster from the start.”

The SEC filed this lawsuit against Ripple and its top executives back in December 2020, alleging that Ripple-associated XRP is an unregistered security. It suggested that it has been a security since 2013 and that sales of billions of XRP on the secondary market in the seven years leading up to the lawsuit were also securities.

Still, as Forbes reported, 75,000 XRP holders led by attorney John Deaton became involved in the case, and more than 3,000 of them provided affidavits to Ripple’s defense team stating that “they had never heard of the company they allegedly invested in before the SEC filed the lawsuit.”

Noting that unlike Ripple, the SEC “has had no allies,” the report also said that other XRP users unrelated to Ripple filed amicus briefs, as did Digital Chamber of Commerce and Blockchain Association.

Crucially, Ripple also went after the Hinman documents and fought hard to get them – and finally received them from the SEC recently, at the beginning of this month. These are relevant as former CFO William Hinman said in a 2018 speech that Ethereum (ETH) is not a security. Therefore, the internal SEC emails and drafts behind that speech became highly relevant to Ripple’s case.

According to attorney John Deaton, Gensler cannot win this case, but he needs a victory over such a large firm in the industry, which will “prove” him right, adding:

“What does the politician do? He takes the guaranteed political victory.”

Meanwhile, Ripple’s general counsel Stuart Alderoty said the case will be settled quickly if the SEC will clearly state that XRP is not a security.

____

Learn more:
– XRP Price Prediction As Lawsuit Conclusion Nears – $3 Soon?
– Ripple’s XRP holdings are ‘Under 50%’

– Crypto Lawyer John Deaton Praises XRP Holders For Effort During Ripple Lawsuit – Find Out What He Said
– Cardano founder Hoskinson criticizes the XRP community for spreading conspiracy theories