Ripple CTO dives into SEC case and the silence he was forced into

The “XRP Army” have been vocally opposed to the SEC case and are eagerly anticipating Gary Gensler’s departure. David Schwartz, the CTO of Ripple, has expressed his frustration with the lack of freedom to communicate. Still, he expressed his contentment in observing others express these truths on Ripple’s behalf.

David Schwartz explained that, despite his willingness to be more forthcoming about the matter, he thinks a detailed discussion of the past would not be beneficial. Due to strategic laws, Ripple has been unable to combat misinformation directly.

I feel that way sometimes. One of the things that most annoyed me about the lawsuit and the war on crypto was that there were things that were indisputably true that I could not say. It definitely lifted my spirits to see someone else say them when I could not.

— David "JoelKatz" Schwartz (@JoelKatz) January 10, 2025

In addition, amid this high-stakes legal battle, he disclosed the obstacles presented by the litigation and the more extensive regulatory scrutiny that the crypto industry is currently experiencing. He detailed how Ripple was unable to address certain truths about the situation due to the legal constraints surrounding the case

Schwartz stated, “One of the things that most annoyed me about the lawsuit and the war on crypto was that there were things that were indisputably true that I could not say.” 

Ripple vs. SEC battlefield

The ongoing legal dispute between Ripple Labs and the US SEC has garnered significant attention, with significant implications for the entire crypto industry. The lawsuit was commenced in December 2020. It accuses Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen of raising more than $1.3 billion through an unregistered securities offering by selling XRP.

Presently, Judge Phyllis J. Hamilton has granted Ripple CEO Brad Garlinghouse the ability to maintain the confidentiality of certain court documents. This comprises documents regarding expert testimony and judgments.

As the case advances to the subsequent phase, both Ripple and the SEC are permitted to maintain the confidentiality of these specifics following a regulation designed to safeguard sensitive information. This will be in waiting for the case to be heard.

A glimpse of hope for Ripple as a security case wins

On Tuesday, Judge Katherine Polk Failla agreed to escalate the dispute over the definition of crypto security, resulting in a victory for Coinbase against the SEC. The SEC agreed that Bitcoin should be treated as a commodity, like gold or oil. 

This began after Chair Gary Gensler, Powell’s successor, implemented a series of enforcement actions. The SEC has contended that companies such as Coinbase are violating critical laws by providing unregistered securities, such as Solana, to investors on its platform in these instances.

However, the legal rulings that have resulted from the cases have been inconsistent. This is because they have been heard by various judges and federal courts. Some judges, including Failla, have appeared to support the SEC’s arguments. 

Others, such as the judge who is overseeing the Ripple suit, have taken issue with the agency’s stances and argued that the sale of crypto does not always constitute investment contracts.

Apparently, Failla denied the primary components of Coinbase’s petition to dismiss the SEC’s lawsuit in March. This was a move that was anticipated, but indicated that she would support the SEC in her final decision. Failla rejected Coinbase’s argument that crypto should be considered a “major question” of economic significance. This thereby restricts the SEC’s interpretation of securities oversight. 

She also rejected the exchange’s assertion that reasonable notice had not been provided for the agency’s supervision approach. She contended that the offer and sale of crypto on Coinbase’s platform appeared to be investment contracts, which should be classified as securities. Nevertheless, Failla consented to dismiss a portion of the SEC’s case regarding self-custodial wallets.

With her ruling on Tuesday, Failla agreed that “conflicting decisions on an important legal issue necessitate the Second Circuit’s guidance.” The Ripple lawsuit will also likely move to the Second Circuit.

Meanwhile, Failla’s decision occurred at a critical juncture for the SEC, as Gensler declared his intention to resign as chair in January. Trump has indicated that he intends to adopt a more lenient stance toward crypto during his second term as president. 

Still, according to certain legal professionals, the SEC may discontinue its lawsuits against crypto companies under the leadership of former commissioner Paul Atkins, who has assumed the position of chair.

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