The ongoing Ripple vs SEC saga continues, with the lawsuit filed against Ripple by the SEC for allegedly trading the XRP token as an unlicensed security asset revealing the need for clearer regulation within the industry. Ripple’s Attorney has commented on recent developments, and predicted further lawsuits by the SEC.
The US Securities and Exchange Commission's lawsuit against Ripple has taken many twists and turns in the lengthy proceedings between the regulator and the cryptocurrency exchange. The landmark case has been closely watched by the crypto community, and regulators from around the world, with the results of the case holding significance for the future of many cryptocurrency exchanges.
The theatrical nature of the court proceedings has even led cryptocurrency-based content platform MContent to virtually release its documentary “Ripple vs SEC Saga” that will be screened on the metaverse.
Ripple’s fair notice argument has been upheld by Judge Torres, who denied SEC’s motion to dismiss this argument in March, while also upholding a motion that the SEC did not have to prove that Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen knowingly violated securities laws.
The SEC Division of Examinations recently released a report which laid out the technological, legal, and regulatory risks associated with securing crypto assets, and expressed that crypto companies are expected to record an asset and a corresponding liability on their balance sheets at fair value.
A spokesperson for the SEC noted the following:
“Examinations of market participants engaged with crypto assets will continue to review the custody arrangements for such assets and will assess the offer, sale, recommendation, advice, and trading of crypto assets.”
The attorney for ripple, John E Deaton, reacted to the news by the regulator, sharing the following via Twitter:
“The SEC is making sh*t up as it goes. The war continues. I predicted an SEC lawsuit against one or more exchanges by the end of the summer. I still believe it.”
This will mean that liquidity providers and automated market makers will have to comply with the new regulations and register with the SEC if digital assets are added to their balance sheets, leaving them open to the scrutiny of the US regulator, and perhaps to a potential lawsuit.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.