In a striking critique of Ripple’s legal strategy, attorney Fred Rispoli has taken aim at the company’s executives, Brad Garlinghouse and Chris Larsen, for their recent decision to settle only some of the charges brought against them by the U.S. Securities and Exchange Commission (SEC). Rispoli argues that the Ripple leaders missed a crucial opportunity by not seeking a full dismissal of all charges, particularly the contentious “aiding and abetting” claims.
A Partial Settlement – A Legal Misstep?
Through a series of pointed posts on X (formerly Twitter), Rispoli expressed concern over Garlinghouse and Larsen’s choice to accept a partial settlement, arguing that they had strong grounds to challenge the SEC’s allegations in their entirety. Rispoli, who has closely followed the Ripple vs. SEC case, highlighted the potential for a jury to side with the executives, especially regarding the SEC’s “Institutional Sales” claim. He contended that the agency would struggle to demonstrate the requisite level of recklessness needed to substantiate their claims, a fact that could have frustrated a jury, possibly leading to a unanimous verdict in favor of Ripple’s leaders.
Missed Opportunities for Key Testimonies
Rispoli elaborated on the potential implications of pursuing a full trial, noting that key witnesses might have emerged during the process. He pointed to the possible testimonies of SEC figures like former chairman Jay Clayton and former co-director of the corporation finance division Bill Hinman. These testimonies could have provided critical insights into the SEC’s internal decisions regarding cryptocurrency classifications, particularly concerning XRP.
A trial could also have unveiled documents previously shielded from discovery, which Rispoli believes would have benefited not only Ripple but also other digital currency firms facing similar legal challenges in the future. By choosing to settle rather than fully contest the charges, Rispoli argues that Ripple’s executives may have lost an invaluable opportunity to reshape the regulatory landscape for cryptocurrencies.
Ripple’s Legal Strategy and Future Prospects
In response to the SEC’s ongoing appeals of specific aspects of a 2023 judgment by U.S. District Judge Analisa Torres, Ripple Labs has filed a cross-appeal. In her ruling, Torres stated that Ripple’s sales of XRP to retail investors via digital platforms do not constitute securities sales. Nevertheless, the SEC is challenging other elements of this ruling, including Ripple’s institutional sales and the distribution of XRP for non-cash considerations.
Ripple’s legal chief, Stuart Alderoty, has expressed optimism regarding the outcome of their case, suggesting that the SEC’s appeal will not gain traction. “I felt good about our case in the Southern District of New York. I feel even better about our case in the Second Circuit,” Alderoty remarked in a recent interview, indicating confidence in their legal position.
Recent developments have also sparked controversy regarding the SEC’s filing timeline. Users on X have questioned whether the SEC submitted its appeal brief within the allowed time frame. While the SEC’s Form C was reportedly filed on October 16, the Second Circuit’s docket shows the filing date as October 17, leading to speculation about its validity. In response to these concerns, an SEC spokesperson asserted, “It was filed on time.”
Also Read: Ripple vs. SEC – XRP Braces For 50% Price Swings As Legal Battle Escalates
Despite these disputes, the SEC’s appeal does not contest the ruling that XRP sales to retail investors through exchanges are not securities, leaving that critical part of the decision intact. As the Ripple vs. SEC saga unfolds, Rispoli’s critiques and the ongoing legal maneuvers signal a pivotal moment in the cryptocurrency industry, with far-reaching implications for regulatory frameworks and corporate strategies in the blockchain space.
In this tumultuous environment, Ripple’s next moves will be closely scrutinized as the case continues to shape the future of digital assets in the U.S.
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.
About The Author
