Crypto lawyer Stephen Palley thinks Ripple faces an overarching problem with XRP in terms of its ongoing lawsuit with the U.S. Securities and Exchange Commission (SEC).
The SEC alleges Ripple illegally sold XRP as an unregistered security upon its launch and maintains that the digital asset is a security to this day. The SEC also filed actions against Brad Garlinghouse, Ripple’s chief executive, and Chris Larsen, the company’s co-founder.
Says Palley,
“The problem with XRP is that no matter how it’s spun it will always be reducible to a centralized thing with little credible utility and large cash payouts to the small number of people who created, control the thing, and keep getting rich from it. Clarence Darrow couldn’t fix that.
This is why they will lose if this goes into dispositive motions, trial or appeal.”
Palley doubts Ripple will prevail and believes the payments company will ultimately settle.
“This is a prediction. I guess I could be wrong, I have to hedge because I’m a lawyer. Ripple’s going to lose. Garlinghouse and Larsen are going to lose. They’ll monkey around, they’ll file motions to dismiss, they’ll be denied. They’ll probably do some discovery, maybe they take some depositions. Presumably in the enforcement action, they took depositions… and they’ll probably file cross-motions for summary judgement, and they’re going to lose.
Unless there’s a limitations argument or unless they get a sympathetic judge who reads through this and is convinced that this was not an ongoing securities offering. They lose and they probably settle.”
This week, the SEC and Ripple announced in a joint statement that they appear unlikely to settle the lawsuit anytime soon.
The initial pre-trial conference in the lawsuit will take place on February 22nd.
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