As the Ripple versus Securities and Exchange Commission (SEC) legal dispute inches closer to a summary judgment, the cryptocurrency industry eagerly awaits the outcome. The case has significant implications for how digital assets will be regulated in the United States, which has sparked intense interest and speculation.
Against this backdrop, the SEC has stepped up its regulatory oversight of the crypto sector in the past week, drawing sharp criticism from some industry stakeholders who claim that the agency’s approach might be biased.
Under the latest update, United States defense attorney and popular Ripple and SEC case commentator James Filan has once again called for the resignation of the regulator’s chairman Gary Gensler.
This is after the SEC launched a crackdown on staking while suing crypto firm Paxos over the issuance of its Binance USD stablecoin.
As per the regulator, the stablecoin is classified as a security and did not follow the laid down laws upon its issuance. It is worth noting that the SEC is also suing Ripple for selling unregistered securities in the form of XRP tokens.
Questions over SEC’s classification of securities
In this line, the XRP holder’s attorney in the SEC lawsuit John Deaton called the securities label misleading.
“Gary Gensler and the SEC keep focusing on the token itself, calling the vast majority of cryptocurrencies themselves securities. The problem is that smart influential people, other than Gensler, are pushing this false narrative that tokens themselves are securities,” he said.
Elsewhere, Deaton hailed Coinbase CEO Brian Armstrong after he declared that staking services on the platform are not securities.
In the meantime, Deaton has also joined another Ripple class action lawsuit wherein investors have accused the company and its CEO, Brad Garlinghouse, of selling XRP as an unregistered security and are seeking damages for their losses. The plaintiffs have also requested that the court classify XRP as a security. Deaton is joining the case as an amicus brief.
The Ripple and SEC case continues to receive criticism, with Stuart Alderoty, Ripple’s General Counsel, terming the matter ‘misguided.’ Similarly, Deaton criticized the SEC’s arguments as ‘schizophrenic’ regarding the common enterprise definition. He added that the judge could reject summary judgment.
Furthermore, although the overall case outcome remains a matter of speculation, the crypto community has closely followed the matter between the SEC and the blockchain-based sharing platform LBRY. Particularly, SEC sued LBRY for offering its LBC tokens without registering with the regulator. However, the judge ruled that LBC tokens are only considered securities at the time of direct sale.
With the favorable ruling for LBRY, there is an increasing clamor for XRP’s relisting. Notably, XRP fans have been urging crypto exchanges Coinbase and Binance US to reinstate the token on their respective platforms.
The growing momentum behind this movement raises the question of whether it will succeed in pressuring the exchanges to relist XRP. However, there is still uncertainty regarding the SEC’s ongoing lawsuit, and it remains to be seen whether the regulator will prolong the litigation beyond the anticipated timeline for a summary judgment in March 2023.
Despite the legal uncertainty in the U.S., Ripple has been pushing forward with its growth momentum in other parts of the world.
XRP price analysis
By press time, XRP was changing hands at $0.37 with losses of over 4% on the daily chart.
Overall, the prospects of XRP will likely be determined by the case outcomes where a win for Ripple might be bullish for the token and vice versa. On the other hand, if exchanges relist XRP, it could also be a bullish outlook.
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