Thinking Crypto, a YouTube channel with more than 150,000 followers posted a video to address some critical issues around the just concluded Ripple versus SEC case.
The video titled “SEC Ripple XRP Case Ruling Details” hosted by Tony Edward with guest attorney Fred Rispolim, suggested that the case may not be totally over since the SEC may still see reasons to appeal.
The SEC was awarded $125 million, which is considered relatively low compared to the $2 billion initially sought. The judge ruled that Ripple did not act with bad intent, which contributed to the lower penalty.
The court rejected the SEC’s drafted order and instead issued a more generic injunction that prohibits Ripple from violating Section 5 of the Securities Law going forward. This decision did not explicitly dismantle Ripple’s business model, which was a significant victory for Ripple.
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Will the SEC and Ripple Appeal?
Fred Rispoli discussed the possibility of an appeal from both the SEC and Ripple. He suggests it’s a 50/50 chance but leans toward neither party appealing due to the risks involved and the nuanced nature of the facts in this case.
The SEC might avoid appealing because the case isn’t strong enough to risk setting a bad precedent.
Factors Against Appeal
- Bad Facts for the SEC: The SEC has “bad facts” in this case, which could be detrimental if the case were taken to a higher court. Bad facts can lead to bad law, meaning the SEC might end up with a ruling that further limits its enforcement power.
- Appropriate Penalty: The judge’s decision to set the penalty at $125 million strikes a balance that discourages both parties from appealing. A higher or lower penalty might have prompted either party to challenge the ruling.
- Secondary Market Sales: The SEC might be hesitant to appeal because they fear losing on the issue of secondary market sales, which is critical to their enforcement strategy in the crypto space.
Political Pressure Mounting on Gary Gensler
There’s increasing political pressure on SEC Chairman Gary Gensler, particularly with upcoming elections. The video mentions the political climate, with candidates like Donald Trump openly criticizing Gensler and others. Political considerations might influence whether the SEC decides to appeal.
The SEC has recently dropped several cases and investigations, including those against Binance’s stablecoin and Stacks, possibly indicating political pressure and a shift in strategy.
What Are the Chances of an XRP ETF Being Approved?
Fred Rispoli believes the chances of an XRP ETF being approved have increased, particularly if there’s a change in the SEC’s leadership after the upcoming elections.
He predicts that a more crypto-friendly environment could emerge, making it more likely for an XRP ETF to be approved, potentially as one of the top five ETFs.
The ruling leaves Ripple in a position to potentially accelerate its business model, though there are risks if they push the limits of what the court has allowed.
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