Ripple’s SEC case now has 2 expected outcomes, with big ramifications for crypto

Source Cryptopolitan

Ripple’s long-running legal battle with the US Securities and Exchange Commission (SEC) is reportedly nearing its conclusion, according to sources within the agency, cited by an XRP community member dubbed Andrew. The insiders claim that negotiations involving the five-year court case could reclassify XRP as a commodity.

According to a March 17 post by Andrew, who uses the X handle AP_Abacus, two SEC sources said that XRP could receive “serious commodity consideration” and that the fine imposed on Ripple in late 2024 may be “greatly reduced.” 

He also mentioned that the SEC’s new leadership is “aware” of how important the case is to the broader digital currency industry in terms of regulatory laws. 

Ripple vs. SEC court injunction filing is still active

Andrew’s statements come just five days after FOX News correspondent Eleanor Terrett reported that negotiations had been delayed due to Ripple’s legal team pushing for more favorable settlement terms.

Terrett said that Ripple is supposedly contesting the $125 million fine imposed after an August 2023 district court ruling by Judge Analisa Torres. She also stated that Ripple is feeling optimistic about its plea not to pay fines because the SEC has been reversing enforcement actions against other crypto firms since the Trump administration came into office.

Accepting the Torres ruling as it stands would mean that Ripple is essentially agreeing to admit to wrongdoing — but now the SEC itself is seemingly unsure whether any wrongdoing occurred,” Terret commented.

The company is also reportedly fighting a permanent injunction preventing it from selling XRP to institutional investors. A commenter on Andrew’s post noted that if Ripple successfully renegotiates its terms, it could avoid paying any fine altogether. 

Payment of a fine is an agreement of guilt, and this ‘guilt’ in identical parallel cases was dismissed,” they stated.

The SEC’s appeal is not feasible, community speaks

On January 15, the SEC formally appealed Judge Torres’ July 2023 ruling, which found that while XRP was considered an investment contract when sold to institutional investors, it did not meet that classification when sold to retail investors. 

XRP community members felt the ruling was a partial victory for Ripple, as it confirmed that secondary market sales of XRP were not subject to securities regulations.

In a repost of Andrew’s rumored report, Attorney Bill Morgan said XRP’s commodity status and the reduction of fines are plausible, but the main challenge lies in the injunction. 

“Something needs to happen regarding the injunction,” he wrote, insisting that the restrictions on institutional sales must be resolved for Ripple to actually continue operating in the US market more freely.

Lawyer Hogan sees multiple ways to make ‘settlements’

In a March 13 thread published on X, pro-XRP lawyer Jeremy Hogan said he was particularly intrigued by one phrase from Terrett’s report: the “case is in the process of wrapping up and could be over soon.” 

To Hogan, this meant that Ripple and the SEC may be working on a private settlement agreement that would negate the need for any other court proceeding. 

He discussed a scenario in which the SEC and Ripple agree to settle privately, dismiss the appeal, and never bring the settlement terms back to the trial court for ratification. According to the lawyer, this approach would require the SEC to forgo enforcing the injunction, which may be a tough concession for the financial watchdog.

I have a hard time believing the SEC would agree to THAT, but possibly it could agree to something more oblique such as providing Ripple a path to actually register sales of XRP to institutional investors (for example). Meaning that Ripple could get what it needs while the SEC doesn’t blatantly snub the Court’s order,” Hogan surmised.

In her ruling, Judge Torres rejected the SEC’s request for disgorgement, ruling that institutional investors did not suffer monetary harm. She also issued an injunction barring Ripple from violating securities laws but declined to impose a blanket ban on all institutional XRP sales.

Hogan argued that bringing the case back to the trial court could be Ripple’s best option, as it would allow the judge to amend the judgment. He cited the 2010 SEC vs. Bank of America case, where Judge Rakoff approved a consent judgment despite initially believing the bank’s settlement terms were too lenient.

So what if the trial court refuses to amend the judgment?  You are still in the same position and can still enter into your private settlement agreement. You get a free shot at it – and that is a rare thing in life. But it would take longer than a couple of days,” he concluded.

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