Ripple’s Legal Drama Puts US SEC Judge on the Spot

The digital asset market has been anticipating regulatory clarity for a long time. The US Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs may finally bring it. However, the much-awaited Summary Judgment of the XRP lawsuit could be delayed. Could we finally see a decision on the anticipated deadline day of March 31st?

The extensive case between Ripple and the Securities and Exchange Commission (SEC) has taken yet another turn, with criticism being leveled against the regulator over its handling. The SEC claims that anyone who acquires XRP in Japan is part of a common enterprise with Ripple and all other XRP holders. The assertion is based on the view that the token is a security, despite Japan’s Financial Services Agency stating that XRP is not a security. 

In a tweet dated February 19th, Ripple’s lawyer, John Deaton, publicly criticized the SEC’s claims, calling them “stupidly outrageous.”

Deaton stated that he would not have filed a suit against the SEC if it had only pursued Ripple’s sales. The lawyer asserted that the only victory the SEC would likely attain in the case against Ripple is that the company sold XRP as a security from 2013 to 2017.

Deaton recently spoke out about the legal proceedings surrounding the XRP memo. According to reports, the memo is protected by the Deliberative Process Privilege (DPP), which means that Ripple did not intend to obtain it when the court handed it over. 

While the memos were noted to have no recommendations at the end, there is still significant controversy surrounding the issue. Deaton has gone so far as to suggest that the Judge’s decision over the XRP Howey Memo was a very close call. 

This sentiment was echoed in an amicus brief filed in court, highlighting the importance of taking a critical approach. Ultimately, the circumstances around the XRP memo remain unclear, and further legal action will likely be required before a final decision can be reached. Despite the uncertainty, there have been claims that the SEC has overreached its jurisdiction.

In addition to Deaton’s criticisms, Ripple’s Chief Legal Officer, Stuart Alderoty, has suggested that the SEC may be overstepping its authority. 

He emphasized the importance of observing the rule of law to prevent government agencies from becoming autocratic. Alderoty cited the 1936 case of Jones v. SEC, in which the courts were vigilant against the threat of “officialdom unchained.”

Deaton recently revealed that there is no deadline for the Summary Judgment yet, and a list of pending motions has been in the queue for over six months. These motions are slated to be submitted at the end of March or September. 

While the lawsuit’s outcome is still up in the air, Deaton suggests that Ripple winning would not affect regulations much. Regulatory clarity in the crypto industry might not happen until 2025.

The Ripple vs SEC lawsuit is expected to set a regulatory precedent for the crypto market and provide much-needed clarity for the industry. Despite the anticipated Summary Judgment, further delays may elicit further confusion over the definition of a security and the role of native tokens.