Ripple vs SEC Case: Closure coming sooner than expected?

After Vibe filed its redacted response to the SEC’s opposition in court to the motion for summary judgment, the case closure seems to be on the horizon.

Ripple Labs Inc. previously filed a motion for summary judgment in its ongoing legal battle with the US Securities and Exchange Commission (SEC). Ripple founder Brad Gardlinghouse congratulated the entire Ripple team on getting to the current point.

The court allowed entities to file an amicus curiae brief in favor of Ripple or the SEC, with the last day being November 30, 2022. Both parties were expected to file responses to the motion, which Ripple primarily pursued. Amicus is an individual or organization that is not party to an action but who volunteers or is invited by the court to advise on a matter before the court.

Ripple vs. SEC Review

United States Securities and Exchange Commission (SEC) filed a lawsuit against Ripple on December 22, 2020, claiming that the San Francisco fintech firm raised over $1.3 billion through dishonest tactics. The SEC claimed that Ripple sold its coin, XRP, for unauthorized securities.

Vibe it also argued that the SEC failed to prove that XRP executives had the requisite intent to create an investment contract. Ripple’s motion for summary judgment is yet another step in its ongoing legal battle with the SEC. If the motion is granted, it would effectively end the case and XRP would no longer be subject to SEC enforcement actions. The SEC has yet to respond to XRP’s motion.

Garlinghouse, CEO of Ripple labs, states that the company is growing despite the current decline in business. According to him, the volume of his On-Demand Liquidity cross-border payment service, which is powered by XRP, increased to $8 billion in the first quarter of 2022 from $1 billion in the same period last year.

The SEC failed to comply with three elements of Howey

The defense noted that the SEC has been unable to satisfy each of the three howey elements. Regarding the first element, the financial investment, the SEC admits that Defendants’ distribution of billions of XRP units did not involve any financial investment.

Even in transactions involving an exchange of money, the SEC has not been able to show that the buyers invested that money in a common enterprise, as Howey requires, rather than simply buying an asset.”

Ripple’s lawyers clarified that in the absence of an investment of money (or its equivalent) in a common company, there can be no investment contract and therefore no violation of securities laws.

The SEC cannot overcome two fundamental flaws in the final element, the expectation of profit based solely on the efforts of others.” First, no reasonable expectation can exist in the absence of actual obligations undertaken by the promoter, and the SEC has not identified any. Second, even if such obligations existed, there could be no reasonable expectation of profit in the absence of proof of the promoter’s ability to meet its obligations and meet investor expectations.

Ripple legal team

In this statement, the SEC argues that it is not possible for investors to have a reasonable expectation of earnings based solely on the promoter’s efforts, because there must be actual obligations assumed by the promoter and proof of the promoter’s ability to perform those obligations to create such an expectation. Without these two elements, it is impossible for investors to have a reasonable expectation of profit.

The SEC alleges that XRP is an investment

The SEC’s complaint further alleges that Ripple has made a number of representations to market XRP as an investment, including promoting its appreciation potential and misleading statements about XRP’s liquidity.

the SECOND it also alleges that Ripple has offered financial incentives to market makers to trade XRP and has paid for services to trade XRP. Ultimately, it will be up to a court to decide whether Ripple has violated the Howey test and whether XRP is a security.

What is the significance of the Ripple vs SEC court ruling?

If the SEC were to prevail, other issuers of digital assets could be forced to comply with the same administrative and regulatory requirements as traditional securities. Furthermore, it could create an environment of fear and uncertainty in the cryptocurrency industry, and investors may be hesitant to take risks in the digital asset space.

It could also have an effect on the future of Initial Coin Offerings (ICOs), which have been widely used to raise capital for startups but have come under increasing regulatory scrutiny. Ultimately, the outcome of the SEC’s legal action against Ripple could have a major impact on the future of cryptocurrencies in the US and could even shape the regulatory landscape for digital assets around the world.

However, if Ripple manages to win the case, it would be a huge win for the Company. He could open the door for other cryptocurrency companies facing similar legal challenges.

Should you buy XRP now?

Ripple is currently trading at $0.390249 at the time of writing. It has been trading as low as $0.3875 and as high as $0.3928 in the last 24 hours. XRP’s market capitalization is $39,070,010,913 and the token has a total trading volume of $445,302,743. 50.26 billion XRP is currently in circulation. The bears have taken advantage of the Ripple vs SEC news, but the bulls are also working hard to hold the market.

Ripple investors are still waiting for the best in court to end their case with the SEC. Investors are urged to exercise caution and make informed financial decisions.