The Judge presiding over the SEC v Ripple case, Judge Netburn has now ruled in favor of Ripple in the lastest court session. Judge Netburn granted Ripple’s request for privileged SEC documents That determines the classification of XRP as securities.
This development came from a scoop on Twitter where famous American journalist Charles Gasparino tweeted the news to his over 100,000 followers. The SEC vs Ripple lawsuit was initiated by the SEC in December 2020 where the watchdog cited Ripple’s failure to register its XRP digital assets as securities before trading them in the crypto market.
The favorable ruling counts as a minor win for the crypto giant, however, further developments served as a dampener for the mood when Judge Netburn approved the admittance of SEC official, Bill Hinman’s infamous speech on the classifications of securities as evidence in the ongoing case.
Ripple aims to prove and subsequently argue that Hinman’s speech showcased SEC Bias that favors the firm’s competitors like Ethereum. Hinman has however denied such claims, isolating his claims and stating that his comments were his own opinions and do not represent the SEC’s stand nor were they made in an official capacity.
SEC Vs Ripple Background Information
The United States financial watchdog, the Securities and Exchange Commission (SEC) undertook enforcement action against crypto firm Ripple as it filed a lawsuit against the crypto giant and two of its executives on December 22, 2020. The lawsuit detailed the regulatory body’s accusation that stated that the crypto firm traded $1.3 billion worth of XRP as securities Without Prior registration with the SEC.
The crypto community was in an uproar immediately after SEC’s announcement with Ripple and numerous concerned parties countering the SEC and Its claims citing SEC bias in its assessment of the digital assets class.
The SEC’s Arguments
In the lawsuit filed in 2020, the SEC claimed that the XRP crypto token was classified as securities because it served as a capital avenue for Ripple’s platform and was used to fuel the platform’s features services that facilitated funds transfer among users. SEC claimed that Ripple’s executives made a lot of money through the sales of the digital assets class.
The SEC regulations already have previously established guidelines concerning securities, securities must be registered with the regulatory body with a stipulated portion of the securities information being made public. These regulations aim to combat fraud and protect investors’ interests in the country.
SEC’s lawsuit against Ripple wasn’t the first of its kind, the commission is notorious for undertaking enforcement actions without prior clarification of the boundaries and guidelines to guide compliance actions.
In past cases before Ripple’s lawsuit, when the SEC targets a crypto firm, said firms choose to settle through negotiations. However, in the case of Ripple, the crypto firm chose to fight the regulatory body head-on rather than comply with its “unreasonable demands”.
Ripple claims that the SEC is biased in the application of its securities definition of virtual currencies and assets. Should Ripple successfully prove their case against the commission, the latter’s authority will be greatly undermined which will see the credibility of the lawsuit nose dive.
Ripple particularly cited the free pass that the SEC afforded Ethereum as a bias indicator, debunking the SEC’s claim that Ethereum is a fully decentralized entity as bogus since the commission is now on a warpath with XRP, which is essentially a mirror of Ether’s operational principles.
Lawyers in the community are confident of a win for the crypto firm. Famous crypto proponent and lawyer, Jeremy Hogan stated earlier in January that the scales are tilting towards Ripple’s win with the court case slated not to extend past April by experts in the community.
A win for Ripple will open up a brand new era for the crypto industry globally and serve as a role model for crypto entities looking to fight unfair regulations and enforcement actions globally.