Legal Battle between Ripple Labs and SEC Seek End Game

Ripple’s legal battle with the US Securities and Exchange Commission (SEC) has entered the summary judgment phase after both parties submitted their respective motions.

On Sunday, September 18, Ripple Defense attorney James Filan informed the crypto community about these submissions via Twitter social media.

Both Ripple and SEC filed motions for summary judgment in the Southern District of New York, asking District Judge Analisa Torres to make a ruling based on the arguments filed in accompanying documents.

In December 2020, the SEC sued Ripple Labs, alleging that the crypto firm had raised over $1.3 billion by selling XRP in unregistered securities transactions. But Ripple maintained that XRP sales and trading did not meet the Howey Test, a test created by the Supreme Court to determine whether a transaction qualifies as a security.

On Friday, September 16, the parties filed various discovery motions over the last two years without settling whether Ripple violated securities law by selling XRP.

The motions for summary judgment imply that the parties are asking the court to decide whether the SEC or Ripple has provided enough evidence to prove whether there was a violation.

Based on the summary judgment for each side, the SEC wants the federal judge to rule that the crypto company affiliated with the XRP cryptocurrency violated federal securities laws. On the other hand, Ripple wants the judge to dismiss the lawsuit without requiring a lengthy trial.

The SEC argued, among other things, that various statements by Ripple’s executives show that Ripple sold XRP, and XRP investors bought the cryptocurrency with hopes that their holdings would spike in value over time.

But Ripple claimed that there was no contract between the company and XRP investors and that there was no common enterprise, one of the requirements under the Howey test.

What Are Crypto Users Saying?

The filing of these Motions for Summary Judgement has stirred up many online chats in the crypto-community. With this, the community believes the lawsuit is approaching an end.

Meanwhile, crypto legal expert Jeremy Hogan commented about the SEC-Ripple case. He pointed out the SEC is facing several major problems, which indicated a victory for Ripple.

The analyst claimed that the SEC failed to get “on record” that any XRP purchaser heard Ripple’s marketing pitch. He said this factor eventually has the “burden to prove EVERYTHING here.” Lawyer Hogan further disclosed that one of the SEC’s experts admitted that most of XRP’s price changes are due to market forces “and not Ripple.”

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XRP gains 30% after Ripple gets permission to explain ‘fair notice defense’ vs. SEC

XRP price rose by nearly 30% in less than a week amid positive sentiment around the court case, in which the U.S. Securities and Exchange Commission (SEC) claims that Ripple sold XRP as illegal securities.

SEC vs. Ripple

Judge Analisa Torres has granted Ripple permission to respond to the SEC’s Memorandum of Law in support of Motion to Strike fair notice defense, according to court documents.

Additionally, Judge Torres also ordered to unseal three documents concerning the SEC vs. Ripple case, including Ripple’s CEO Brad Garlinghouse’s email thread and deposition notice and founder Chris Larsen’s email string.

Markets received Judge Torres’s orders positively. Soon after they made it to the wire, XRP’s price rallied by almost 30%, rising from its Feb. 3’s lowest level of $0.058 to as high as $0.782 on Feb. 7.

The upside move picked momentum also as Jeremy Hogan, partner at law firm Hogan & Hogan, noted that the SEC vs. Ripple might be heading toward a verdict.

XRP “death cross” ahead?

The latest bout of buying in the XRP market also appeared as the token retested its multi-month support trendline, as shown in the chart below.

XRP/USD weekly price chart. Source: TradingView

XRP now faces a resistance confluence ahead in the form of its 20-week (green) and 50-week (red) exponential moving averages (EMAs). Meanwhile, the two moving averages look poised to form a “death cross” should the 20-week EMA cross below the 50-week EMA — a classic sell signal.

Nonetheless, a decisive, high-volumed close above the said EMAs may limit the selloff risks associated with the death cross. Moreover, an extended upside momentum may have XRP price retest its descending trendline resistance near $1.26, a 50% price increase from current levels.

Related: Ripple announces $200M share buyback and expresses optimism for 2022

Alexander Mamasidikov, the co-founder of crypto wallet service MinePlex, ignored the downside warnings, asserting that the end to a long-standing court battle between the SEC and Ripple would prove bullish for XRP.

“With the anticipation that the SEC-induced legal battle alleging the status of XRP as security will be settled this year, the current buy ups can be seen as an avenue to stack up at a discount for possible price surge in the longer term,” he said, adding:

“Should the current trend be sustained, XRP’s community’s ambitious backing can help push the cryptocurrency to hit a new monthly high of $0.88 per coin.”

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