Legal experts say the protracted legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) may conclude with the $125 million judgment against Ripple remaining unchanged.
Attorney Fred Rispoli suggests that the SEC might be delaying further action, possibly awaiting Paul Atkins’s takeover before making final decisions. Currently, Interim SEC Chair Mark Uyeda has replaced Gary Gensler as the highest-ranking official at the SEC.
As we noted in a previous report, the SEC has already dismissed crypto-related lawsuits against Uniswap, Kraken, Coinbase, and ConsenSys, yet it has shown no signs of considering a dismissal in the ongoing case against Ripple. Additionally, it has established a dedicated crypto task force aimed at fostering innovation while ensuring accountability. This initiative, led by SEC Commissioner Hester Peirce, was launched in January, signaling a more balanced regulatory approach toward the crypto industry.
On August 7, 2024, Judge Analisa Torres of the U.S. District Court for the Southern District of New York delivered a mixed ruling. She determined that while Ripple’s institutional sales of XRP did qualify as securities transactions, its programmatic sales to retail investors did not. Consequently, Ripple was fined $125 million for the institutional sales, a figure significantly lower than the $2 billion sought by the SEC. Fred Rispoli commented on this, “Yes, I’m saying I bet there are significant discussions on having this penalty reduced or waived.”
XRP as a Potential Settlement Option
Ripple has long maintained a significant portion of its XRP supply in escrow, periodically releasing a set amount to ensure price stability and prevent market flooding. Currently, the company holds 37.1 billion XRP. This sizable reserve has fueled speculation that Ripple could use its XRP holdings to settle fines, potentially contributing to the creation of a U.S. digital asset reserve.
Crypto analyst Yassin Mobarak weighed in on this possibility, stating,
The government has an incentive to agree to this because, for the first time in history, the U.S. government would own XRP and therefore be incentivized to let its value grow over time. That would remove the shackles that prevented XRP from being used in the U.S., allowing it to finally assume the utility it was created for. This, in turn, would lead to positive price movements.
The appellate process is now in motion as the Second Circuit Court of Appeals reviews the legal battle. As part of the proceedings, the SEC was required to file its appellate brief by January 15, outlining its arguments against the previous ruling, while Ripple Labs has until April 16 to submit its response.
Meanwhile, XRP has experienced notable volatility amid the legal uncertainty, gaining 8.95% over the past week but losing 5.61% in the past day, bringing its current trading price to $2.36.