One of the principles of the blockchain is that there is no need for a central authority. However, this puts things in a shaky place if everything starts to go wrong. The central authority that many of its proponents call for can be a reassurance for them in those cases. Crypto law can feel like the Wild West right now, especially in terms of what companies are doing with crypto and how it works. One company that’s been in the news recently due to its crypto dealings is Ripple, the company behind XRP tokens. Read on to learn about Ripple and its history before hearing about this latest crypto lawsuit regarding its XRP tokens. Here’s a look at crypto law right now, and the Ripple XRP lawsuit update — which can be pivotal for the industry.
What Is Crypto Law?
As adoption has picked up, the crypto industry has increased its influence on American society. You can see it in its lobbying efforts and the use of political action committees, and other such ventures, such as when it formed trade associations that help promote cryptocurrencies on the state, regional, and national levels.
One more way in which crypto law is changing society is through self-regulation. It may be difficult to understand the full scope of the self-regulatory organizations’ impact on crypto in the same way as when a political campaign is financed by a PAC or a startup is nurtured in a crypto industry-sponsored accelerator. Nevertheless, SROs are shaping the crypto industry and could have a role in the crypto regulatory framework emerging from the US federal government.
Crypto Law: Self Regulatory Organizations (SROs)
As U.S. President Joe Biden’s Executive Order on Ensuring Responsible Development of Digital Assets is carried out, the federal government will fill in the gaps left by the limited state and federal regulatory frameworks.
This means that the important function of an SRO will change as well.
Industry expert Ken Baldwin was hopeful about the future of crypto regulation because spot markets will have a regulator of primary jurisdiction.
This could bring a fresh dynamic to the crypto space. Tu-Sekine mentioned that an exchange might do one of the following: Defining listing requirements, setting rules and operational procedures, and petitioning the SEC for rule amendments.
What Is The Ripple XRP Lawsuit?
There’s a major case surrounding Ripple and XRP. The ongoing Ripple XRP lawsuit can be pivotal for the entire industry.
This company was founded in 2012, with the claim that it offers a different blockchain-based alternative to SWIFT, which processes trillions of dollars worth of transactions a day. The company also sells its software to banks and fintech companies.
Ripple also uses its cryptocurrency, XRP, which is currently the sixth-largest coin by market capitalization, to help expedite cross-border transactions. The company holds most of the 100 billion XRP coins currently in circulation and occasionally releases them from an escrow account to keep their price stable.
Garlinghouse contends that if Ripple doesn’t win, then most tokens being traded on U.S. platforms would be labeled securities and they would need to register with the SEC as broker-dealers.
XRP, a cryptocurrency and it operates on a decentralized ledger and has been used by project developers and consumers with no connection to Ripple for years. XRP fits the criteria of Hinman’s 2018 speech better than ether does. Not only does Ripple control less than 4% of the validators on the XRP Ledger, but Ripple has objected to changes on the ledger and lost, at times. In other words, the XRP network is arguably more decentralized than the Ethereum network.
Ripple Charged By SEC In 2020
On his last day at the SEC, Clayton Ripple had a class-action lawsuit filed against him. Curious timing. Around two weeks before Clayton issued the lawsuit, a former SEC Commissioner Joseph Grundfest told him not to because Ripple had been traded for 7 years. Clayton asked Grundfest to consider XRP as identical to Ether and said that if he filed the lawsuit, it would call into question the SEC’s ability to exercise discretion.
Clayton also told Grundfest that filing the lawsuit would cause billions of dollars to be lost for the many investors who have no connection to Ripple. Upon being filed, the suit made XRP lose $15 billion in market cap. However, it should be noted that Grundfest was retained by Ripple, which doesn’t change the legitimacy of what he said.
Ripple XRP Lawsuit Update
It’s important to stay up to date on the Ripple XRP lawsuit. In the most recent Ripple XRP lawsuit update, Ripple has lost its lawsuit to throw out the Metz Report in which the defendants denounced the SEC for what they view as malicious gamesmanship.
The plaintiff filed a supplemental report within the discovery deadline, prompting calls for the case to be dismissed. It was widely seen as a move by the SEC to stall proceedings even further.
In spite of the decision, Judge Sarah Netburn, who reopened discovery on April 23, and re-deposed Dr. Metz until May 13, is punishing the SEC.
The court explained, that the SEC improperly failed to comply with the Court’s order to provide notice of its additional disclosures so as to provide a more informed argument to the Court and because, by choosing the last day of discovery, the SEC has deprived the defendants of due process.
One of the most important Ripple XRP lawsuit updates is the SEC’s “loss”.
Consequently, the SEC is ordered to pay the defendants reasonable costs incurred by them in the filing of the motion to strike and the re-deposition of Dr. Metz. Their prior agreement to have each side pay for their own expert’s time applies to this case; hence, the SEC will also reimburse Dr. Metz for his time.
According to the court, the SEC has privilege when it comes to the Estabrook notes and the judge deemed the motion to compel to be unsuccessful.
The Turning Point For Crypto Law?
Judge Sarah Netburn turned down Ripple’s motion, so the notes remained privileged. This means Ripple will have a more difficult time fighting the SEC’s accusations. This has caused investors to hold back because of the shift in sentiment.
Due to not being able to access Estabrook’s notes, Ripple executives’ efforts to comply with US securities law can’t be presented. If Ripple loses the lawsuit, it could be a pivotal moment for the entire crypto industry. Now, there are also other ongoing lawsuits that are tied to cryptocurrencies, such as SIM swap attacks class-action lawsuits. If you’re a part of the cryptocurrency industry or invest in cryptos, it’s important to stay up to date on anything and everything related to crypto law.