Amidst speculation regarding 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 possible steps the two parties might take if they opt for a settlement.
Addressing the factors that might impact a potential settlement between the two parties, attorney Deaton pointed out the significance of 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 crypto staking aspect remains part of the legal proceedings.
He explained in a post,
“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”
Should the motion to dismiss be approved, the SEC’s ability to pursue an appeal would be considerably constrained, making a settlement a logical option. Deaton clarified that even if an appeal were possible in such a situation, the agency’s authority would be diminished.
The only way @Ripple and the @SECGov settle before the end of the year is if Judge Failla grants the @coinbase MTD (or partially grants it – finding token sales on an exchange in a blind bid/ask transaction do not fall under U.S. securities laws but allows the staking component… https://t.co/0KzGT1l0OI
— John E Deaton (@JohnEDeaton1) September 2, 2023
In a filing on September 1, 2023, Ripple indicated that the Summary Judgment did not address the legal basis for the interlocutory appeal. Their opposition was rooted in the argument that the agency had strayed from the established legal perspective, specifically regarding the application of the Howey Test to XRP token sales.
The SEC initiated a lawsuit against Ripple, CEO Brad Garlinghouse and co-founder Chris Larsen in December 2020, causing several exchanges to remove XRP to avoid potential legal complications. However, after the Torres’ ruling, many of these exchanges indicated their intention to relist the token or explore such possibilities in the future.
In 2023, the SEC has pursued various cryptocurrency firms on allegations of securities violations, including Binance and Coinbase. On August 29, asset manager Grayscale secured a legal victory against the SEC through an appeal that mandated a review of its application for a spot Bitcoin exchange-traded fund (ETF).