Ripple’s legal conflict with the Securities and Exchange Commission (SEC) has shifted significantly following a new legal interpretation of a recent court injunction.
According to For Fred Rispoli, a counsel who closely monitors the case, the court’s temporary restraining order is particularly relevant to the agency’s XRP sales ripple that was made prior to 2018. This means that our current and future sales are still legal, unless they reflect the structure of these initial transactions.
The SEC alleges that Ripple’s $728 million XRP to institutional investors from 2013 to 2018 was equivalent to illegal sales of unregistered securities under US law.
The judge ruled in favor of Ripple’s claim that he was not engaged in securities transactions when he sold digital assets XRP to the public through so-called crypto exchanges. However, regarding the sale of the company’s early facilities, the court agreed with the SEC that they were offering unregistered securities.
Therefore, the court cited inflation concerns to justify an injunction that would prevent Ripple from repeating 2018-style institutional sales.
As a result, a limited injunction was issued to prevent Ripple from enforcing similar transactions. However, lawyer Fred Rispoli made it clear that this does not prohibit Ripple from fully introducing the sale of the scheme.
Farrell and Morgan focus on the future of Ripple’s regulation
Cryptocurrency legal commentator James Farrell also investigated the case but agreed to Rispoli’s interpretation. He stressed that the injunction is not a complete ban on institutional sales. Instead, it prohibits ripple from breaking section 5 of the Securities Act, which involves the sale of unregistered securities.
Farrell said Ripple can still sell XRP to institutions if the transaction passes through the appropriate regulatory channel. He explained that one option is for the company to request a “non-action letter” from the SEC, which formally ensures that the activities listed will not cause enforcement action.
Farrell’s take is also consistent with that of former SEC attorney Mark Farrell. Advocates say they believe the SEC will ultimately waive the appeal. This is the decision to ultimately end the four-year legal showdown. However, he added that the case could still be considered “continuous” as this charm is still alive.
Another prominent lawyer, Bill Morgan, adds new wrinkles to the argument and writes that the settlement can only be a completed transaction if the SEC has to vote again to approve the terms. This is a reminder that the layer of regulatory processes is still in effect.
Ripple adapts strategies to maintain the right side of regulators
The legal developments that depend on balance have overhauled Ripple’s strategy to sell to large-cost institution players. The company’s management said the kind of deal that attracted SEC scrutiny is no longer being carried out.
There have been a deliberate change in strategy regarding how we have managed XRP sales since 2018. The company has strengthened its disclosures, held conversations with regulators and submitted a registration statement to ensure strict compliance.
However, aggressive strategies are far from the old Sale’s financial approach to sales.
Some analysts also argue that changes in SEC leadership can drive Ripple’s revised strategy. Former SEC Chairman Gary Gensler was considered anti-cryptography, but changes in leadership and regulations could lead to a more balanced perspective. It may reduce the opportunity for further enforcement action against Ripple due to its institutional activities.
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