The “trial of the century” of the US Securities and Exchange Commission (SEC) against Ripple and XRP moves the minds. Now some crypto lawyers even think that the SEC is overstepping legal boundaries with its litigation.
First things first: there is still no verdict in the so-called Ripple (XRP) lawsuit, which the U.S. Securities and Exchange Commission (SEC) instigated in December 2020. In the ever-lengthening wait, crypto lawyers are playing out scenarios that extend beyond the future of Ripple and XRP. The chief legal officer of crypto exchange Coinbase, Paul Grewal, got the ball rolling on Twitter. Coinbase is also facing legal action from the SEC. Grewal now argues, based on previous supreme court case law, that the SEC is exceeding its authority and is itself violating laws with its interpretation of “investment contracts.”
This assessment prompts XRP investor advocate John Deaton to think further legally. Also on Twitter, Deaton lays out that he agrees with Grewal. Because never in the US history there had been a case, in which an “investment contract” came off, with which between the contracting parties no communication or a community of interest was involved. Furthermore: Never before in US history have “investment contracts” been defined in such a way as by the SEC that they should also affect secondary markets such as Coinbase. The SEC should finally own up, Deaton said, to trying to regulate legal gray areas of the crypto industry with legally untenable arguments after the fact.
Realistically, SEC is not expected to be persuaded by the positions of its opponents. But what Deaton is citing there as a litigant in the Ripple and XRP case already sounds like preparation for possible appeals. And Grewal for Coinbase is probably willing to take the legal battle with the SEC all the way to the Constitutional Court. Both are appealing to U.S. policymakers to rein in the SEC and its chief Gary Gensler. However, there is little to suggest that such initiatives would gain majority support.
Conclusion: XRP and Ripple as harbingers for US crypto industry.
The showdown between the SEC and Ripple over XRP is dragging on, and we last told you here why it may well last into the fall. The side stories in the waiting period make it clear: Arguments and evidence are being gathered all over the US crypto industry about how to hand the SEC a resounding defeat in court. But this concerns future proceedings and not the judgment-ready case of Ripple and XRP.