- Fox Business released their investigative report on the Ripple vs SEC lawsuit.
- The report which details the entire case so far finds the SEC’s move against Ripple to still be dubious.
As promised by the leading news channel, Fox Business, the media outlet has now released its investigative report on the lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs, Inc. The case has been dragging on since December last year and has attracted a lot of attention from the public and the media.
The dispute has been that Ripple’s sale of its XRP token amounted to selling unregistered securities. In Fox Business’s report, they start with the situation around the time the SEC first took action against the fintech company. They point out that the case was filed just days before there was a change of power in the commission, an occurrence that is rare in such matters as outgoing leaders usually leave such important decisions to the incoming governments to figure out. Additionally curious was the fact that rather than turning belly up and choosing to settle with the SEC, Ripple chose to fight out their case in court.
These critical decisions by both parties leave a lot hanging in the balance to be decided by the outcome of the case. On one hand, should the SEC prevail, it would mean that the crypto industry will come under severe regulatory scrutiny going forward. This is feared by the industry as it will result in innovation being stifled or even worse going offshore from the U.S. On the other hand, a win for Ripple would mean that the SEC would cede control over the industry to the much more lenient Commodity Futures Trading Commission (CFTC).
The key findings of Fox Business’s Investigation
Their investigation starts from the immediate past chairman of the SEC, Jay Clayton’s, tenure. Clayton had been seriously considering how to regulate cryptocurrencies. To do this, he brought enforcement actions against several obvious crypto frauds. Clayton brought 87 crypto-related actions in his tenure.
His action against Ripple however continues to seem skeptical according to the report. For one, the SEC considered Ethereum and its Ether token, which had a lot of similarities with XRP, along with Bitcoin to not be securities. The point of Ether has been much disputed by Ripple.
Fox Business found that Bill Hinman, the SEC’s former director of corporate finance, held several meetings in 2017 and 2018 with people associated with Consensys which in turn is highly tied in with Ethereum. This was before his now-famous speech that declared Ethereum to not be a security. Ripple proponents argue that those meetings could have influenced his decision.
The Effects on XRP and its holders
Since the case started, the XRP price has struggled to gain ground in the market.
Shortly after the suit was filed, XRP fell 70% and has since then not been able to even come close to its $3 all-time high price. This has warranted XRP holders to join the fray and make their case against the SEC. XRP holders have argued that the SEC’s action was not in their best interest. Led by John Deaton, XRP holders have been highly involved in the case from the beginning of the proceedings till now when they have been granted friend of the court status.