Former SEC Exec Convinced There’s ‘A Good Chance’ The Government Agency Will Lose XRP Legal Brawl With Ripple

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SEC v. Ripple: Here's What's Next On August 31
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Blockchain payments firm Ripple has been making great strides in its long-standing legal battle with the US Securities and Exchange Commission (SEC).

And now, a former executive at the SEC believes that the case, which centers on the XRP cryptocurrency, will most likely end with the securities regulator losing.

Ripple Has The Upper Hand In XRP Lawsuit

The meat of the suit is centered around the agency’s claim that Ripple, along with co-founder Christian Larsen and CEO Bradley Garlinghouse, traded almost $1.4 billion in their cryptocurrency XRP through an unregistered securities offering. The case has so far seen many twists and turns, with Ripple scoring key procedural victories along the way.

In an interview with Thinking Crypto released on YouTube On Feb. 21, former Managing Executive for Policy at the SEC, Joseph Hall, said he thinks Ripple’s fair notice defense is quite strong. “I’m very sympathetic to that argument. It’s a basic due process argument. The Ripple network was operating for years before the last-minute filing of a lawsuit against them,” Hall stated.

As you may know, Ripple was in operation since 2012, but the SEC lodged its scorching complaint eights years later in the waning days of the SEC chair and other key decision-makers. Hall doesn’t understand why the SEC decided to file the lawsuit or what it is really trying to prove with the XRP litigation.

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This one-of-a-kind lawsuit will not only decide Ripple’s fate but could also have a lasting impact on the entire cryptocurrency industry. As Hall sagely points out, the SEC’s “entire regulatory project could be basically shut down if they lose on the merits, and I think there’s a pretty good chance that they will lose on the merits.”

The lawsuit has noticeably been riddled with countless discovery disputes and delays, which Hall describes as “little skirmishes” as the case barrels towards a trial.

The ex-SEC official also noted that thousands of XRP holders joining in the case under the representation of attorney John Deaton is “compelling” and could make the judge scratch her head. However, he doesn’t think it will have any “deciding role in what the judge determines in terms of whether or not XRP is a security.” Instead, the judge will be using the 76-year-old Howey Test.

Lawsuit Not Likely To End This Year, Says Hall

Things have started heating up in the lawsuit in recent weeks, with the magistrate judge making a number of rulings on motions. Hall expects “real substantive action” in the case over the case of the year.

Yet, litigation is slow and appeals are possible no matter the outcome of the district level phase where the lawsuit is currently at. For this reason, Hall adds, reaching a resolution this year seems highly unlikely.

The stakes in the lawsuit have risen even higher for both parties in recent months. Seeing as how both Ripple and the SEC are deep in the case, a settlement is also not likely.

It remains to be seen whether Ripple will win the larger war against the SEC as Hall predicts. Ultimately, a win for Ripple would embolden the crypto sector, which has long blamed the SEC for failing to come up with a rational way to regulate digital assets.