The summary judgment in the ongoing legal battle in the cryptocurrency market might come in 2023, not this year.
Ripple’s (CRYPTO:XRP) native token has gone from bad to worse in Q2 2022. From US$0.733 on April 21, 2022, XRP plunged 43.78% to US$0.412 in 30 days. The current price is also 87.8% lower than its peak of US$3.37 on January 7, 2018.
Besides the prevailing negative sentiment in the cryptocurrency market, the lawsuit filed the SEC in December 2020 against Ripple Labs and two of its senior executives remains unresolved. In a tweet, Stuart Alderoty, Ripple’s general counsel, said, “It now looks like a resolution will come in 2023.”
Painful legal battle
The SEC lawsuit in December 2020 was painful, because it stunned what could have been XRP’s bullish growth heading into the new year. Some crypto exchanges, including Coinbase, delisted XRP from their platforms. Panic gripped investors, although the crypto remained resilient throughout 2021 before closing at US$0.849 at year-end.
Fintech company Ripple builds global payment products, and the XRP payment system is one of them. The independent digital asset provides real-time messaging, clearing, and settlement of financial transactions. It connects users or enterprises such as banks, payment providers, and crypto exchanges.
Cross-border payment technology
However, the SEC contends that XRP is an illegal security offering and that Ripple isn’t providing financial and managerial information required by law. The defendants reject the agency’s argument and maintain that XRP is a utility token for payments, and they say it’s not a speculative asset.
Atty. Alderoy said, “There was never a contract for an investment. Owning a unit of XRP provides no right title or interest in Ripple or any distribution of profits from Ripple.” He added that the SEC lawsuit has not slowed Ripple’s growth internationally because the cross-border payments technology continues to make gains.
Ripple’s general counsel said, “What we’ve said since day one is that Ripple is defending this lawsuit not only on its own behalf but on behalf of all of the entire crypto industry.” In May 2022, the legal brawl centres on the emails of former SEC director William Hinman.
Hinman said in 2018 that the Ether cryptocurrency was not a security. Somehow, crypto analysts took it to mean that Hinman’s statement was an endorsement that cryptocurrencies are not securities. However, the SEC refuse to release Hinman’s speech drafts and related emails, despite the federal judge’s order.
The SEC sent a letter to the judge stating that the communications have attorney-client privilege protection. It argued, “The question of ‘whether offers and sales of ether constitute securities transactions’ is indisputably a legal question.” Ripple want access to said emails and related documents as it will tip the case in their favour.
As the case moves to the next phase, expect more filings and hearings on motions from both sides. Thus, people might have to wait for the summary judgement by December this year or later.
Blockchain.com CEO Peter Smith said more pain is coming to the cryptocurrency market. He added that a washout of risk and leverage across the entire global market system is ongoing. Smith believes it will be a long process of adoption and growth. For XRP, technical analysts’ price predictions are US$0.37 this month and a maximum of US$0.44 in June 2022