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XRP Lawsuit: Who Will Win the Ripple Case?

crypto, chart, stocks
crypto, chart, stocks

Written by Christopher Liew, CFA at The Motley Fool Canada

The lawsuit filed by the U.S. SEC against Ripple (CRYPTO:XRP) and two of its senior executives is a landmark case in the cryptocurrency market. Legal experts, including the general counsel of the defendants, see the court’s decision to reject the plaintiff’s motion to strike the fair notice defense as a major win.

However, it’s not the final verdict, and therefore, there’s no clear winner yet. Ripple and XRP holders want the case resolved as soon as possible because a win could propel the crypto’s price. More importantly, the bullish sentiment could return to the volatile crypto space.

Judgement or settlement?

John Deaton, the lawyer for XRP holders, said previously that the biggest decision in the lawsuit is around the corner. Unfortunately, further delay is likely following the court’s deliberative process privilege (DPP) ruling in favour of the SEC. DPP is a legal defence that grants immunity to government institutions from disclosing their internal correspondence.

People following the case should mark their calendars on an important date this month. Mediator Judge Sarah Netburn has ordered the contending parties to agree on a briefing schedule for summary judgment motions. Defendants and plaintiff will file a Joint Proposed Scheduling Order on April 22, 2022.

Attorney Jeremy Hogan, a partner at the Hogan & Hogan law firm, isn’t discounting a settlement during the mediation proceedings or after the close of fact discovery. If not April, Hogan thinks it may come next month. The case is more than one year old in that a settlement is the quickest way to end it.

Affirmative defense

Ripple contends that the agency unfairly engaged in regulation by enforcement. It says the SEC didn’t give a fair notice that Ripple’s conduct violates the law. The company insists there should have been a clarification on whether XRP was a security.

Somehow, the court’s denial of the SEC’s motion to exclude the “fair notice” affirmative defence favours Ripple. Deaton criticizes the plaintiff for delaying the case with its latest moves, particularly by keeping discovery alive. He adds that with SEC’s proposed rules on crypto platforms, cases versus crypto exchanges are forthcoming.

The SEC versus Ripple litigation is precedent-setting and its outcome could have repercussions on the entire digital asset space.

Stalled growth

XRP’s growth stalled and lost favour with investors because of the SEC lawsuit. Delisting of Ripple’s native token by crypto exchanges in the U.S. did damage, although a high percentage of XRP holders are abroad. Nevertheless, a win by Ripple could prompt American exchanges like Coinbase to enlist XRP again.

Despite the lawsuit, XRP is the seventh-largest crypto by market cap (US$39.94 billion). However, the price remains stagnant, hovering around US$0.80 and struggling to breach the US$1 threshold. Current investors are down by only 0.1% year-to-date.

Ripple has a partnership with Digital Euro Think Tank. It will provide inputs on the design of central bank digital currencies (CBDCs). The company is likewise working with the Digital Euro Association to share technical knowledge for a European CBDC.

Price prediction

Because of Ripple’s strong network, many cryptocurrency observers describe XRP as one of the most secure tokens in the industry. Some market analysts say interest level has diminished slightly. Still, their average price forecast for 2022 is US$1.30, a 56.6% upside from its current price.

The post XRP Lawsuit: Who Will Win the Ripple Case? appeared first on The Motley Fool Canada.

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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.