YEREVAN (CoinChapter.com) — The Ripple SEC lawsuit is reaching a critical phase, with Judge Torres expecting to deliver her final judgment sometime in the third quarter of 2024. This decision will follow the resolution of the motion to seal, a contentious issue between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs. Both sides have presented their arguments, with key disputes centering on the sealing of Ripple’s financial details and XRP sales to institutional investors.
Legal experts anticipate that this judgment could come much earlier than expected. The outcome of this phase is eagerly awaited by all parties involved, including third parties with vested interests.
Is XRP’s Legal Status in the U.S. in Danger?
The U.S. House of Representatives has taken a significant step by voting on the Financial Innovation and Technology for the 21st Century Act (FIT21). This bill aims to establish a regulatory framework for digital asset trading and issuance and define the roles of the CFTC and SEC in regulating the crypto industry in the United States. If enacted, this law will influence ongoing lawsuits against major players like Coinbase and Binance, alongside Ripple.
One noteworthy section of the bill mirrors Judge Torres’ ruling that XRP itself is not a security. The crypto bill states:
“A digital asset sold or transferred pursuant to an investment contract is not and does not become a security as a result of being sold or transferred under that contract.”
This legislative move has raised questions about XRP’s decentralization. Lawyer Bill Morgan clarified:
“The legislation is not retrospective. The court has already found XRP is not a security. The SEC will not challenge this judgment. The legislation will not change that.”
Ripple’s Readiness for SEC Penalties
As of late, the SEC has opposed Ripple’s motion to seal evidence from the public.
The SEC argues that Ripple’s redaction requests would obscure critical public information essential for the court’s decisions and public understanding of the penalties involved. This includes details about Ripple’s current assets, recent sales, revenues, expenses, and discounts to institutional investors.
The SEC is seeking $2 billion in total fines. However, Ripple contends it should only pay civil penalties not exceeding $10 million. Courts generally do not accept the initial amounts requested by parties, suggesting the final amount may be significantly lower.
Bill Morgan predicts Ripple will largely lose the motion to seal. He also noted that the SEC clarified that none of the sales to institutions with discounts were ODL contracts. Despite this, the SEC still seeks a permanent injunction to stop ODL sales.
Amidst the legal proceedings, the price of XRP has remained range-bound. Market analysts suggest that this stability reflects the uncertainty surrounding the lawsuit’s outcome. Investors and traders are closely watching the developments, particularly the final judgment from Judge Torres and the potential impact of the FIT21 bill.
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