The notorious XRP lawsuit is still ongoing, and both the United States Securities and Exchange Commission and Ripple’s Counsel are gearing up for another round. But, Joseph Hall, a former SEC official, thinks that Ripple will win the case.
After pointing out the SEC’s lack of basis for filing the lawsuit, he strongly implied that the company, Ripple, would win the case. He even went as far as to say that the SEC shouldn’t have started the case in the first place. He then said that the commission’s regulatory effort could be “shut down”.
Before diving deeper into the topic, you should know that if cryptocurrencies are not considered securities, it means that the commission cannot regulate them. The developers do not need to file financial reports, disclose their holdings, and register to the SEC. Without these, cryptocurrencies and very easy to develop and release to the public.
Due to the unregulated nature of the cryptocurrency market, companies can create and sell these tokens freely. If these tokens are subjected to securities law, heavy costs could be imposed on the companies and limit their distribution. This will effectively put them under the jurisdiction of the SEC and regulate them under the commission’s rules.
However, in this case, Joseph Hall thinks that Ripple has an excellent defense, especially as the SEC did not notify the company that it was being investigated before filing the lawsuit. By law, the SEC is required to notify organizations before they investigate them. Purely based on procedure, Hall thinks the case is likely to fail.
Another reason he pointed out was the peculiar timing of the case. The SEC was aware of the existence of Ripple since 2012, but the commission did not bring up the lawsuit until several years after. Hall claims that this could damage the commission’s case.
If Ripple wins the XRP lawsuit, it would be good news for investors. It will also set a precedent for future cases against cryptocurrencies.