Potential Resolution in the XRP Lawsuit: An In-Depth Analysis
SEC and Ripple Nearing a Settlement?
In what might signify a crucial turning point for the XRP legal battle, Eleanor Terrett, a journalist from Fox Business, disclosed that the US Securities and Exchange Commission (SEC) and Ripple Labs may soon reach a settlement agreement. According to Terrett, “Two reliable sources have informed me that the SEC versus Ripple case […] might conclude shortly,” she noted. The delay in finalizing an agreement is attributed to Ripple’s legal team negotiating for more advantageous terms concerning the district court’s ruling in August.
The earlier ruling imposed a hefty $125 million fine on Ripple and restricted the sale of XRP to institutional investors. Terrett’s insights suggest that Ripple’s legal team is resisting, contending that if the SEC’s new leadership intends to “reset enforcement actions” against previously targeted cryptocurrency firms, Ripple should not be subject to a judgment that no longer aligns with the agency’s current stance. Terrett observed, “There’s no established guideline for this situation,” emphasizing the unique complexity that might be prolonging the resolution process.
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An Efficient Strategy to Conclude the XRP Case
Pro-XRP lawyer Fred Rispoli has expressed, through social media platform X, that resolving the dispute over the ruling should be relatively uncomplicated—provided the SEC is willing. “I simply don’t see this as the major issue some are portraying it to be,” he commented, describing the process as unconventional but not excessively intricate.
Rispoli outlined several strategies through which the agency and Ripple could potentially nullify Judge Torres’ order. He emphasized, “The SEC and Ripple could submit a motion to vacate the judgment—the most straightforward method to eliminate it. By informing the Court ‘in consideration of potentially losing our entire crypto jurisdiction if we lose the appeal, we’re agreeing to vacate judgment in exchange for Ripple dropping its appeal,’ Judge Torres is unlikely to challenge this.”
He further explained that even without formally vacating the order, the SEC could draft an agreement indicating it will not enforce the ruling under the same terms. “The SEC doesn’t even need to vacate the order. It can simply establish an agreement with Ripple indicating it won’t enforce the judgment under the same consideration,” Rispoli said.
Referring to the SEC’s broad discretion within its Enforcement Manual, which frequently advocates for settlement over uncertain litigation, Rispoli added, “The SEC Enforcement Manual includes various broad, vague references that endorse cooperation and settlement over litigation uncertainties, so the authority for this conduct is justified […], but even if it weren’t, who cares? This isn’t ideal, but the SEC (and most other government agencies) has demonstrated it acts according to its will, without regard for due process. In this situation, it serves justice positively.”
Despite Rispoli’s optimism, some community members express concern about the potential resurgence of stringent enforcement under future leadership. One user on X questioned, “What if, say, in four years, we revert to a Gensler-style SEC and the SEC attempts to enforce the injunction?”
Rispoli replied, “That’s the ONLY concern… But it can be nullified with a subsequent agreement between the SEC and Ripple. And if your scenario unfolds, crypto would have already lost, and many more entities than just Ripple would be anxious.”
Is It Possible to Override a Court’s Decision?
Another contentious issue is whether the SEC can effectively nullify a district court’s decision through a negotiated settlement. Critics argue that administrative agencies should not have the power to override final judicial rulings.
Rispoli, however, cited a significant precedent involving Citigroup. He referenced SEC v. Citigroup Global Markets, Inc., 673 F.3d 158 (2d Cir. 2012), where an appellate court overturned a district judge’s refusal to approve an SEC settlement. “It has occurred before,” he pointed out, underscoring that courts often grant considerable deference to consent decrees and settlement agreements recommended by the SEC and its enforcement targets. In that instance, the Second Circuit concluded that the district court erred by not deferring to the SEC’s judgment in accepting a settlement.
As of the latest update, XRP was trading at $2.21.
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