Source: Adobe Stock / photo_gonzoUS-based blockchain firm Ripple is likely to win the long-running war with the US Securities and Exchange Commission (SEC), legal experts say, saying the agency may getting away with a bullet in the foot.
Some legal observers have suggested that the agency has failed to fully prove its case, according to a Forbes report. One of the main causes of their downfall could have been the thousands of XRP retail holders who got involved in the case: although they could not be listed as defendants with Ripple, the judge allowed them to file amicus briefs, to have their arguments heard. voices. also.
Attorney Jeremy Hogan was quoted as saying that,
"The SEC can prevail with its motion for summary judgment only if Judge Torres 'forgets his first year of law school.'"
Furthermore, renowned legal experts, namely Curt Levey of the Federalist Society and Professor JW Verret of George Mason University Scalia School of Law, argue that,
"Ripple is on track to win this case."
And that's not all. Verret said that if the SEC decides to appeal to the Supreme Court,
"He is likely to not only lose, but set a sweeping precedent that would limit or completely eliminate Howey's application of cryptocurrencies, which defy the 1946 definitions."
The Howey test refers to the United States Supreme Court ruling to determine whether a transaction is considered an "investment contract" and therefore a security.
According to Forbes,
“The verdict could significantly limit the power of the SEC to regulate cryptocurrencies in the United States. If this is how it ends, it will have been a self-inflicted disaster from the start.”
The SEC filed this lawsuit against Ripple and its top executives in December 2020, alleging that the XRP associated with Ripple is an unregistered security. He suggested that it was a security from 2013 and that sales of billions of XRP on the secondary market over the seven years prior to the lawsuit were also securities.
However, as Forbes reported, 75 XRP holders led by attorney John Deaton became involved in the case, with more than 000 of them providing affidavits to Ripple's defense team stating that they had "never heard of the company in the first place." that they allegedly invested before the SEC filed the suit."
Noting that unlike Ripple, the SEC had “no allies,” the report also claims that other XRP users unrelated to Ripple have filed amicus briefs, as have the Digital Chamber of Commerce and the Blockchain Association.
Crucially, Ripple also went after the Hinman documents and fought to obtain them, eventually receiving them from the SEC as recently as earlier 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 emails from the SEC and the drafts behind this talk became very relevant to the Ripple case.
The SEC, Forbes said, is driving "this bus off a cliff" because they are litigators, but also because SEC Chairman Gary Gensler is "ultimately a political figure." According to attorney John Deaton, Gensler cannot win this case, but he needs a win over such a large company in the industry, which would "prove" him right, adding:
"What does the politician do? He gets guaranteed political victory.
Meanwhile, Ripple general counsel Stuart Alderoty said the matter would be resolved quickly if the SEC makes it clear that XRP is not a security.