The long-running saga between Ripple and the SEC took a turn this week, with the U.S. Securities and Exchange Commission (SEC) imposing a $125 million penalty on Ripple Labs. The lawsuit, filed in December 2020, alleged that Ripple’s sale of XRP, its native cryptocurrency, constituted unregistered securities offerings.
Ripple Cleared for ODL Sales (Mostly)
While the fine marks a significant development in the case, it doesn’t necessarily impact Ripple’s core business – On-Demand Liquidity (ODL) – according to legal experts. Jeremy Hogan, a prominent blockchain attorney, believes the ODL model, which uses XRP as a bridge currency for instant cross-border settlements, shouldn’t be significantly affected.
Hogan highlights two key points:
- Geographic Reach: A large portion of Ripple’s ODL sales occur outside the US, falling outside the jurisdiction of the SEC ruling.
- Exemption Opportunities: For US-based sales, Ripple can leverage various exemptions available for business-to-business transactions.
Uncertainties Remain for ODL
However, Hogan cautions that Ripple needs to navigate the situation carefully. The judge didn’t explicitly address ODL sales in her ruling, leaving room for potential future clashes with the SEC. If the SEC believes Ripple violated the court order through ODL practices, they could file a contempt charge. This could lead to further arguments regarding the brief use of XRP in ODL transactions and whether it qualifies for exemptions.
Ripple Likely Adjusted Sales Practices
Hogan also emphasizes that Ripple has had access to the summary judgment for over a year. This suggests they’ve likely adjusted their XRP sales practices to ensure compliance. Whether Ripple has truly steered clear of questionable practices, as the judge implied, remains to be seen, potentially hinging on a future contempt hearing.
The XRP community reacted positively to the news. The actual penalty being significantly lower than the $1 billion+ initially sought by the SEC was seen as a major win. The XRP price surged by a staggering 20%, surpassing the $0.60 mark. This positive sentiment has even sparked discussions regarding the possibility of an XRP-based ETF in the future.
The SEC lawsuit may not be entirely settled, but this recent development provides some clarity for Ripple and the XRP ecosystem. While the ODL model appears to have dodged a major blow, uncertainties remain. The coming months could see further developments in the case, potentially impacting Ripple’s business practices and the future of XRP.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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