Why XRP Holders Should Root for a Narrow Win for Ripple Against the SEC

ripple-xrp-token XRP Staking

The ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has left XRP holders uncertain about the future of their investments. 

However, former SEC Investor Advisory Committee member and securities law professor J.W. Verret has provided insight into why XRP holders should hope for a “thin victory” for Ripple.

Verret explained his views during a recent CryptoLaw live stream interview with John E. Deaton. In the interview, Deaton questioned why the SEC chose to go after Ripple, given that it is one of the best-funded companies in the crypto industry. Ripple CEO Brad Garlinghouse has stated that the company could spend $100 million in legal fees by the end of the case.

Verret suggested that the SEC underestimated the battle with Ripple and expected a settlement. However, given the current circumstances, a settlement seems unlikely. The professor added that there is a high likelihood that whichever party loses in SEC vs. Ripple Labs Inc. will appeal the decision. If an appealable summary judgment is granted, the case could take four to five years to reach the Supreme Court.

Verret believes the case could become the vehicle by which the U.S. Court of Appeals for the Second Circuit and the Supreme Court will reshape administrative law for the crypto industry. However, continued litigation in higher courts could also mean more than five years of regulatory uncertainty and a depressed token price for XRP holders.

According to Verret, the only case in which Ripple wins and the SEC does not appeal is if the fintech company wins solely based on the “Fair Notice” argument. If Ripple wins on this argument alone, the implications for the following cases will be minimal, and the SEC will likely refrain from challenging the decision.

Verret explained, “If it’s more of a win on a fair notice argument alone, that would have fewer implications for the following cases. And the SEC would be unlikely to challenge that, I think. On the other hand, if they lose on that, it doesn’t cause issues for them in other cases, so they might just let that lie.”

Therefore, XRP holders should hope for a “thin win” for Ripple on the “Fair Notice” argument. However, if Ripple wins a bigger victory, the SEC will likely appeal the decision, leading to more regulatory uncertainty for XRP holders.

Verret believes that Ripple and other crypto companies will have a high chance of success on appeal and before the Supreme Court. 

He cited the “Major Questions Doctrine,” which the Supreme Court has used in previous rulings to constrain federal agencies that want to determine a matter of national importance without clear authorization from Congress.

However, Verret concluded that until the SEC’s discretion to regulate crypto is substantially constrained by the “Major Questions Doctrine,” crypto entrepreneurs seeking compliance and those trying to understand the rules of the road will face continued uncertainty.

Therefore, XRP holders should root for a narrow victory for Ripple on the “Fair Notice” argument. That would avoid continued litigation in higher courts and regulatory uncertainty for years to come.

None of the information on this website is investment or financial advice and does not necessarily reflect the views of CryptoMode or the author. CryptoMode is not responsible for any financial losses sustained by acting on information provided on this website by its authors or clients. Always conduct your research before making financial commitments, especially with third-party reviews, presales, and other opportunities.