Ripple vs. SEC: Ongoing Legal Battle Intensifies with New Allegations

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What’s going on in Ripple vs SEC is far away from any predictions. There is a new twist and turn every day, and the XRP community is waiting for its victory for a long time. Whereas Ripple claims that the SEC wants to overreach crypto with unclear laws, the SEC fights back with manipulative stances and unfair practices. Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, has recently criticized the SEC’s handling of the XRP case, highlighting what he perceives as unfair practices and broader challenges for the crypto industry.

Allegations of Unfair Conduct

After a long battle with the SEC, Alderoty found some interesting parallels between the SEC’s actions and the absurdities in Franz Kafka’s novel The Trial, accusing the regulator of conducting unlawful activities. Ripple contends that the SEC’s approach lacks clarity and fairness, reflecting broader issues other cryptocurrency firms like Robinhood and Coinbase face.

Ripple’s Legal Strategy

Ripple has taken steps to protect its interests by filing motions to seal sensitive financial documents to go public. These documents include critical details about earnings, revenues, expenses, and the discounts at which XRP was sold to institutional investors. Ripple argues that disclosing such information would harm its business interests and compromise privacy.

Next, critical in the case, is the SEC’s demand for $2 billion in penalties from Ripple for allegedly selling XRP to institutional investors. However, Ripple’s legal team insists that any civil penalty should be capped at $10 million, arguing that the SEC’s demand is unjustified. They also claim that since there is no customer loss, Ripple should not be forced to pay this hefty amount by using unlawful tactics. 

Broader Regulatory Concerns

Alderoty’s critique underscores the broader tensions between regulatory enforcement and business operations within the cryptocurrency industry. Ripple and other crypto firms have faced what they describe as inconsistent feedback from the SEC, complicating their efforts to comply with regulatory requirements.

Legislative Response

Ripple’s legal battle has also highlighted efforts within the U.S. government to limit the SEC’s regulatory reach. Alderoty has praised bipartisan initiatives in the House of Representatives to curb the SEC’s influence over cryptocurrency regulation. Notably, the House recently voted to overturn the SEC’s Staff Accounting Bulletin No. 121 (SAB 121), which mandates that financial institutions include customers’ cryptocurrency holdings on their balance sheets.

Implications for the Crypto Industry

Ripple’s case against the SEC is significant for the broader cryptocurrency industry. Notably, the SEC also questioned Ripple’s future stablecoins, making it clearer their intention. The outcome could set precedents for how digital assets will be regulated.

Finally, Alderoty’s claims against the SEC are clear and significant. The SEC’s success will negatively impact the crypto market because XRP’s labeling as a security will burn many other assets waiting for similar judgments.