Crypto legal expert: SEC could settle with Ripple if these two scenarios play out.

Crypto legal expert SEC could settle with Ripple if these two scenarios play out.

As Ripple and the United States Securities and Exchange Commission (SEC) continue to engage in a bitter legal dispute, the cryptocurrency community is keeping a keen eye out for the possibility that the two sides may be able to negotiate a compromise and end the conflict. U.S. Attorney John Deaton outlined the two primary factors that would lead to the securities regulator agreeing with Ripple, putting an end to the protracted legal dispute over the distribution of XRP coins.

When will the SEC be able to agree to resolve the claims that have been made against Ripple?

Since late 2020, when the Commission filed a lawsuit against Ripple and members of its leadership for allegedly selling XRP currencies in violation of federal securities laws, the SEC has been keeping a close eye on the cryptocurrency business known as Ripple. During the course of the discovery process, the SEC and Ripple have been engaged in a protracted back-and-forth discussion regarding the records that are required to be produced.

Meanwhile, John E. Deaton, a lawyer who is representing 65,000 XRP holders in the lawsuit via Amicus Curiae status, suggested in a recent tweet thread that the SEC will not settle until the political risks outweigh the political benefits, and right now, chairman Gary Gensler does not think he has much to lose by not having to settle the case. The class action suit is currently pending.

In his presentation, Deaton outlined two potential scenarios in which the SEC would be compelled to reach a settlement with Ripple. First, there is the question of whether or not the agency is required to hand over the majority of emails and notes, including a rough draft of previous head William Hinman’s speech.

Given that Hinman told conference attendees in June 2018 that Ethereum was not a security, this speech has been declared essential to the lawsuit because of what Hinman said in his lecture. In the United States, Ethereum is now considered a commodity, and the Commodity Futures Trading Commission (CFTC) is in charge of regulating derivatives products that are based on the cryptocurrency. Despite this, the SEC has spent a significant amount of time and effort trying to keep these Hinman emails under wraps.

The second factor that could lead to a settlement is the possibility that the SEC will be handed a ruling that is unfavorable to them in the LBRY case.

Unless either of these two things takes place, there won’t be any kind of settlement for Deaton.

The Securities and Exchange Commission (SEC) filed a lawsuit against LBRY in March of last year, alleging that the decentralized content platform had sold LBRY Credit (LBC) tokens worth millions of dollars in 2016 that, for the protection of the general public, ought to have been registered as securities. It’s possible that the XRP v. Ripple legal battle will end with the LBRY case. As a consequence of this, the SEC may refer to the judgments handed down in the LBRY case in the ongoing litigation against Ripple.

The upcoming showdown between Ripple and SEC is shaping up to be decisive.

According to Deaton, Ripple made an offer to settle the matter even before the SEC filed its scathing complaint by agreeing to pay a fine and penalties associated with XRP sales in the early years of the cryptocurrency’s existence. Despite this, the SEC did not agree to settle.

A further observation made by the lawyer and founder of CryptoLaw was that interim SEC Chair Allison Herren Lee changed the policy on accepting settlement proposals based on waivers. Because of this judgment, it is highly unlikely that any settlement will be reached with Ripple or any of the other crypto corporations.

Ripple is currently awaiting a judgement by District Judge Analisa Torres about the SEC’s client-attorney privilege concerns over the Hinman records. These concerns have been raised in relation to the matter of the Hinman documents. Deaton anticipates that the agency will try to obtain certified for an interlocutory appeal to the 2nd Circuit if the judge rules in favor of Ripple, which will further delay the settlement of the dispute involving the Hinman speech emails.

The complaint brought by the SEC has enormous repercussions for Ripple and the cryptocurrency sector as a whole. Imagine for a moment that the regulatory body is victorious in both the LBRY and the Ripple instances. In that scenario, Deaton forecasts that it will provide Gensler with the affirmation that the vast majority of cryptocurrencies qualify as securities and the explanation that the SEC ought to regulate them.

Another attorney named Jeremy Hogan, who has been watching and commenting on the Ripple action, has stated that the SEC’s charges that Ripple offered XRP as an unregistered security might be settled very soon. Hogan hypothesized that the settlement may take place anytime between now and the end of November because all of the cards will be laid out on the table.