As Bitcoinist reported, the legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) is nearing its end in leaps and bounds. Both parties recently filed their motions for summary judgment after the end of the discovery phase.
The chances of the SEC winning the case have continued to shrink, according to various legal experts. Senior analyst at Forbes and senior vice president at Strand Consult, Roslyn Layton, said “signs” of a “bruising defeat” for the SEC are mounting.
In an editorial for Forbes, Layton writes that the SEC “got lost in a maze of its own making” early in the proceedings. Ripple’s high-profile defense team pounced on the SEC’s bizarre premises, revealing the regulator’s haphazard actions to Judge Analisa Torres.
Now that the parties have reached the end of an exhaustive discovery phase with dueling motions for summary judgment, Ripple fired off a robust set of arguments while the SEC’s motion was just a warmed-over version of its original complaint.
Why Ripple Is Set To Defeat The SEC
Foremost, Layton sees the much-watched Hinman speech, in which the then-director of corporate finance outlined that Bitcoin and Ethereum were not securities because its ledger had “decentralized” over time, as a meritorious argument.
Moreover, at no point in the proceedings was the SEC able to prove that Ripple and XRP investors knew, or at least should have known, about the token’s status as a purported security. According to Layton, the SEC’s case went belly-up at the latest with the intervention of tens of thousands of XRP investors represented by attorney John E Deaton.
Although Judge Torres denied the motion to intervene, she allowed amicus briefs to be filed, “sending a blunt signal to the SEC that real investors were going to have her ear.” Of Deatons group of more than 75,000 XRP, more than 3,000 took the opportunity to file an affidavit.
“The SEC has had no allies, not even its own expert witnesses who ended up giving ammunition to the defense,” Layton writes.
Other prominent legal experts also believe Ripple is on its way to victory. These include Curt Levey of the Federalist Society and Professor J.W. Verret of George Mason University’s Scalia School of Law.
Verret predicts that if the SEC appeals all the way to the Supreme Court, it will likely not only lose, but set a far-reaching precedent that would limit or eliminate Howey’s application to cryptocurrencies that defy the 1946 definitions.
Layton adds that, in retrospect, anyone “In retrospect, with all that has happened since, anyone with a political instinct close to Gensler should have convinced him to fold then and there.”
Ripple has already agreed to settle and pay a fine if the SEC declares that XRP is not a security. At the moment, however, a settlement looks unlikely.
One thing, however, is very likely. A victory for Ripple could send the price of the XRP token skyrocketing as investors finally get to celebrate victory after two years.