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- Ripple has gotten the better of the SEC in recent times, but a settlement might end being the most reasonable outcome from the lawsuit.
- Attorney Jeremy Hogan recently looked at what such a settlement might be like, borrowing a leaf out of the SEC vs. Kik Interactive and Telegram books.
It initially seemed like the Ripple lawsuit would be a slam dunk for the Securities and Exchange Commission. The XRP market crashed overnight, exchanges delisted the asset, market sentiment soured against Ripple, the critics started calling for its doom; everything that could go wrong seemed to. But in the six months since then, Ripple has staged a big comeback. However, at the end of it all, the case might come down to a settlement. So, what would that look like?
In his most recent video, Jeremy Hogan, an attorney who is beloved in the XRP community, explored what such a settlement would look like.
After all this talk of "settlement" of the Ripple lawsuit, I spent some time this week to think about what a settlement would look like and what it would mean for XRP. Come and watch: https://t.co/MWc0xOC8NX
Also, we go on a field trip!— Jeremy Hogan (@attorneyjeremy1) June 5, 2021
In the past three years, the SEC has brought a couple of dozens of lawsuits against crypto companies. Most companies have quickly moved to settle with the regulator. For some, it was because they didn’t have the resources to fight with the SEC. For others, it was because they knew that they had breached one law or the other.
Kik Interactive and Telegram (interestingly both were instant messaging companies before going into crypto) are the two that have gone head-to-head with the SEC. They both lost and had to settle in the end. According to Jeremy, Ripple is quite likely going down this route.
Taking lessons from Kik and Telegram, Jeremy outlined the three things Ripple will be looking to get from the settlement.
What Ripple needs from the settlement
For Ripple, the first thing it will be looking out for is the ability to resume its business. For some crypto companies, the SEC’s charges drove them out of business, like Paragon Coin.
If a penalty is imposed, or if there will be disgorgement of profits from sales, it will have to be at a level that does not bankrupt the company…. Whatever number we see in that settlement, it will be a number that Ripple can afford.
The second thing that Ripple will be out for is clarity moving forward. Ripple, and the secondary market, need to know that the SEC debacle is behind it. According to Jeremy, the SEC would never agree to drop all future charges against the secondary market (exchanges) for XRP securities violation.
However, the regulator can make it clear that “sales from the filing of the lawsuit forward are not sales of securities.” That’s about as much clarity as the market will get.
1. Parties always should settle if the terms make sense to them because it's their only chance to 100% control their own destiny. 2. I think Ripple has one strong and one very strong argument at summary judgment. I like those odds. But truly, no one can tell you who will win.
— Jeremy Hogan (@attorneyjeremy1) June 5, 2021
One other solution is for Ripple to sell its escrow XRP directly to accredited investors and/or corporations. It can do this by selling XRP to its on-demand liquidity (ODL) customers. These are usually banks and payment processors.
If the two agree to such a settlement, XRP would be back on exchanges in no time.
…The next effect would give exchanges the confidence to relist XRP. They just need a little push and I’m confident a settlement as outlined would lead to a re-listing of XRP enmasse.
The most significant thing, however, from such a settlement is that Ripple would be the first crypto company in the clear in regards to securities violations.
