Since the US Securities Exchange Commission (SEC) has sued Ripple for illegal securities offerings, the outcome of the case has often been argued on crypto Twitter.
With a pre-trial case conference scheduled for next week, Anderson Kill’s digital currency lawyer, Stephen Palley shared his opinion on the Ripple-SEC case. In a tweet, Palley said that Ripple is unlikely to win this lawsuit because its crypto, XRP has a “problem” to begin with.
The 17 February tweet from Pally read:
“The problem with XRP is that no matter how it’s spun it will always be reducible to a centralized thing with little credible utility and large cash payouts to the small number of people who created, control the thing, and keep getting rich from it. Clarence Darrow couldn’t fix that.
This is why they will lose if this goes into dispositive motions, trial or appeal.”
Earlier, the crypto lawyer suggested how XRP could survive the legal battle and said that Ripple needed to reach a settlement with the federal regulator. The scenario where Ripple would win the lawsuit and replace Howey Test with another new legal crypto identifier is “delusive,” he said.
Palley stressed that Ripple, Garlinghouse, and Larsen “are going to lose” and believed that unless “there is a limitation argument” or Ripple gets “a sympathising judge,” the co-founders will lose and “probably settle.”
On 8 January, Brad Garlinghouse, CEO, said on Twitter that Ripple “tried” to “resolve” the regulatory case:
I’m not going to litigate the SEC’s unproven allegations on Twitter, and as you can imagine, there are new considerations to what can / should be said publicly after the litigation process starts. However, I would like to address 5 key questions I’ve seen. 1/10
— Brad Garlinghouse (@bgarlinghouse) January 7, 2021
A discovery letter from SEC stated that counsel for both parties had met and had previously been discussed. However, the parties “do not believe that there is a prospect of settlement at this time.”
The initial pre-trial conference between Ripple, its co-founders and the legal representatives of the Commission is scheduled for 22 February.
Meanwhile, Ripple faces another case filed by its UK-based investor Tetragon. Tetragon said earlier that it was seeking to “enforce its contractual right to require Ripple to redeem.” It also called for a halt to Ripple’s transactions until the company repays Tetragon’s $175 million investment.
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