The Securities and Exchange Commission’s (SEC) lawsuit against Ripple is taking much longer than expected. The complaint filed by the financial regulator in December alleges that Ripple raised more than $1.3 billion by selling XRP in pending unregistered securities offerings. For its part, the company has denied all allegations and wants the matter settled as quickly as possible. But without a monetary settlement, it will likely continue until early 2022.
After several months, the SEC has yet to prove anything
Following the December 2020 filing, several major exchanges, including Coinbase, had withdrawn XRP from trading for fear of SEC retaliation. In February 2021, it was investors who had ganged up on Ripple, also alleging that the company had engaged in an illegal sale of securities. The same week, the SEC added charges against Ripple’s executives, again on the same legal grounds.
In March, XRP users then came to Ripple’s rescue by filing a motion to intervene in the trial to defend the XRP issuer. Unfortunately, that motion was quickly dismissed by the court. Since then, we have had several legal twists and turns, some of them in Ripple’s favor. Nevertheless, the case has not moved forward and the trial is likely to continue until 2022.
Ripple faces slow justice
On June 14, the court granted the SEC’s request to extend the deadline for establishing the material facts of the case to August 31, 2021. Originally, the SEC had until June 18 to disclose its emails and internal documents on Bitcoin, Ethereum and XRP. Ripple believes that these exchanges will prove that the SEC is biased against major cryptocurrencies and that it has incorporated this factor into the lawsuit. These emails are not publicly available at the time of writing.
By July 2, the SEC will have to produce emails from its main FinHub mailbox related to Bitcoin, Ethereum and XRP, as well as internal documents. Last week, the SEC said it had already collected 25,000 emails and was still reviewing “tens of thousands” of internal documents. July 2 was also supposed to be the deadline for factual discovery, a phase in which parties will be able to bring new evidence. However, with the extension of the deadline, we will have to take our lumps.
On June 14, the judge also extended the deadline for expert testimony to October 15. This means that the parties have until then to conduct expert opinions and will then have to share their findings.
Despite a court case that looked bad, Ripple’s defense is strong after several months. In fact, the court is reluctant to let the SEC do as it pleases and has conceded several elements to Ripple’s benefit in the face of an incomplete SEC case. However, after the initial phase extending to October 2021, it is unlikely that the XRP issuer will succeed in defeating the SEC before the announced forecast in 2022.
