As speculation grows about a potential resolution between Ripple and the United States Securities and Exchange Commission (SEC), attorney John Deaton, representing numerous XRP token holders, has outlined the potential steps the two parties might take if they opt for a settlement.
The Impact of the Coinbase vs SEC Lawsuit
Addressing the factors that could impact a potential settlement, attorney Deaton highlighted the ongoing Coinbase vs SEC lawsuit. He explained that if the judge in the Coinbase case grants the exchange's motion to dismiss, it would indicate that token sales on the exchange are not subject to U.S. securities laws, although the issue of crypto staking would still be part of the legal proceedings.
In a recent post, Deaton stated, "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."
Constrained Appeal and Diminished Authority
If the motion to dismiss is approved, it would significantly limit the SEC's ability to pursue an appeal, making a settlement a more logical option. Deaton emphasized that even if an appeal were possible in such a scenario, the agency's authority would be diminished.
Ripple's filing on September 1, 2023, stated that the Summary Judgment did not address the legal basis for the interlocutory appeal. Ripple argues that the SEC has strayed from the established legal perspective, particularly concerning the application of the Howey Test to XRP token sales.
Ripple's Legal Battle with the SEC
The SEC filed a lawsuit against Ripple, CEO Brad Garlinghouse, and co-founder Chris Larsen in December 2020, leading several exchanges to delist XRP to avoid potential legal complications. However, following the Torres' ruling, many of these exchanges have indicated their intention to relist the XRP token or explore such possibilities in the future.
The SEC has been pursuing various cryptocurrency firms on allegations of securities violations in 2023, including Binance and Coinbase. Recently, on August 29, asset manager Grayscale secured a legal victory against the SEC through an appeal, which resulted in a mandated review of its application for a spot Bitcoin exchange-traded fund (ETF).
