The case between the US Securities and Exchange Commission (SEC) and Ripple is a long-started one that started on December 22, 2020. But right from the time the whole thing started, it is clear to traders and investors that the outcome of the case would mean a lot to the crypto community as a whole. In December 2020, SEC filed a lawsuit against Ripple Labs and two of its executives, claiming they traded more than $1.3 billion in XRP without registering with the commission.
Ripple also reacted to the claim, saying that SEC’s decision about the whole thing is biased and doesn’t hold water. Although the case is still in court, it has greatly impacted the price of the token since it started. If you are thinking of buying Ripple, then you will want to know where we are in the Ripple vs. SEC court case.
What Is SEC Saying About This?
In the lawsuit against Ripple Labs in December 2020, SEC claimed that XRP is classified as a security because it was recently used to finance the Ripple’s platform, leading to some of the platform executives becoming very rich from the sales of XRP.
According to SEC’s regulations in the fight against fraud in the financial space, every security must be registered with the commission. And for a virtual currency to be sold with the intention of making profits from it, it must be regarded as a security. And judging by the analysis given by SEC in their lawsuit, XRP would pass the test and be counted as a security.
What Did Ripple Has to Say?
Many people still wonder why Ripple decided to fight things out with SEC rather than settle things out with them. That’s because Ripple thought SEC had been biased in their judgment. They believe SEC is not doing well in the way they define “security” to virtual currencies. If that is eventually true, then it will mean a huge blow to the reputation of the commission.
At the same time, Ripple is concerned about the associations of some of the members of the commission with some other crypto platforms, especially Ethereum. That is evident in the way SEC gave Ethereum a pass on securities regulation but stood its ground against XRP. That seems like something to suspect for Ripple.
To further hone in on this, it will come as a surprise how Ethereum initially funded its operations with an ICO, which, of course, would be considered a security. The SEC has come out to the open about this, claiming that Ethereum currently operates as a decentralized currency and so is not subjected to securities regulation. But if that is actually the case, Ripple is concerned as to why the commission is strongly attacking XRP.
Furthermore, it will be interesting to know that Ripple was initially financed by venture capital, not an ICO, and now says its operations are just the same as that of Ethereum – there is no material difference between the two.
Ripple has claimed that the SEC’s actions concerning the case are absolutely against the securities law. Especially when SEC itself admitted that there is no statement at all stating whether XRP could be classified as security before filing the case.
So, Where Are We Now?
The major highlights of the current issue between SEC and Ripple can be summarized in the following paragraphs. That will help you understand the current position on the court issue between the two bodies.
SEC is claiming that Ripple was selling XRP without first registering it with the commission. They point to how the token was used to fund Ripple and how Ripple is operating as a centralized platform rather than being decentralized as it claims.
On the other hand, Ripple is claiming that SEC was wrong about their judgment about Ripple and XRP. It said the commission was just being biased. While they gave a pass to some cryptos like Ethereum, the commission simply decided to fight against Ripple.
What Does This Mean to Ripple And the Crypto World?
Although the case is still in court, the outcome will mean a lot to Ripple and the whole crypto community. If the ruling eventually goes in favor of SEC, it would mean more stifled regulations against many of the virtual currencies in the market today. That way, it will be going against the primary vision of cryptocurrency – to be a decentralized entity.
However, if the outcome came out in favor of Ripple, it would mean more freedom for technology developments. But that could also further encourage criminal activities in the crypto space because of the lack of legal safeguards in the community.
In the following month, investors will likely fold their hands anticipating where the compass will turn – whether in favor of SEC or Ripple and also hope for the better regardless of who wins the case.