In addition, Ripple seems to ignore legal issues as investors continue to show their confidence in the company. As Finbold reported, Ripple has reached a valuation of $15 billion to become the 10th largest startup in the US and the only crypto company in the top ten. Alderoty, who grew up in Brooklyn and now lives on the Jersey coast, joined Ripple in 2019 as a leading attorney. He said he gave up “30 years of networking” in more traditional legal roles on Wall Street to try something new. “The first reason I think Ripple will win, and most likely is that it had no legal obligation to XRP buyers after the sale. No obligation after the sale. In other words, there can be no investment contract without investment. However, Ripple Labs president Chris Larsen and Garlinghouse claimed the sales were legal. Their reasoning was based on the so-called Howey test of a U.S. court case, which determines whether an asset is a security. Garlinghouse acknowledged the difficulty of predicting lawsuits, saying he hoped to have Ripple`s dispute with the SEC resolved by early 2023.
Both parties have since filed motions to appeal the opposing party`s summary judgment. The legal teams reiterated their positions on whether XRP should be classified as a security. At present, XRP`s momentum towards the crucial $0.50 has been derailed by the general consolidations of the crypto market. In addition, with no positive news from the Ripple case, XRP continues to trade below the crucial support position of $0.40. If XRP breaks the level, the bulls will have to stand up and push the token to $0.45. The lawsuit was filed with the SEC shortly before Chairman Gary Gensler took office, indicating his more aggressive approach to curbing the crypto industry. Ripple argues that the SEC has chosen “two winners” – BTC and ETH – in the digital asset industry and is unfairly targeting the payments-focused company. (XRP, which was removed from the list of a number of crypto exchanges after the agency filed a lawsuit in 2020, has risen 9% in recent news. The “Hinman documents” remain confidential, but Alderoty said he felt safer after receiving Ripple`s legal arguments. Interestingly, due to the favorable decision, several legal experts claimed that Ripple had a chance to win the case.
U.S. Attorney Jeremy Hogan, in particular, predicted possible outcomes ahead of the verdict and noted that there was a chance for both sides to emerge victorious, he said in a YouTube video posted Dec. 9. In the case of Ripple, there is a standard at play that could be applied to other token projects. If the company wins, it could represent the continuation of token sales to fund the development of decentralized projects – although it will ultimately be up to the legal system to determine what XRP buyers thought they were buying. This communication is a cornerstone of Ripple`s legal strategy in a case approaching the two-year mark. Instead of reaching an agreement with the agency, Ripple is trying to prove that the SEC has taken an unclear, contradictory and arbitrary approach to crypto regulation. If successful, the case could set an important precedent for the crypto industry.
Stu Alderoty, Ripple`s general counsel, told Capital.com: “The filings show that the SEC is acting outside its legal limits. The SEC is not trying to enforce the law — it is trying to reshape it in the hope that it can unduly expand its jurisdiction. The rally slowed slightly as investors waited for more news, but recently rallied after the verdict of the Hinman documents. It managed to break through the $0.50 mark again, hitting a high of $0.54 on October 9. Matthew Solomon, partner at Cleary Gottlieb Steen & Hamilton, and lead attorney Alexander Janghorbani — another pair of former SEC litigators — represent Garlinghouse in the SEC case, while Larsen has retained a legal team led by Michael Gertzman and Martin Flumembaum of Paul, Weiss, Rifkind, Wharton & Garrison. In his initial prediction, Hogan noted that Ripple could win if the summary verdict is that XRP was not sold as a security. He noted that the basis for prediction was that Ripple had no legal obligation to the XRP buyer. According to Hogan: Both Ripple executives said the company spent a lot of money to make this happen. Garlinghouse said the $100 million figure includes legal invoices, as well as investigative and expert witness costs incurred during SEC litigation and the years leading up to the enforcement action. Lobbying costs are separate, the CEO said.
White and Ceresney, a partner couple of Debevoise & Plimpton, are part of the legal team defending Ripple. One of them is Michael Kellogg, founding partner of Kellogg, Hansen, Todd, Figel & Frederick, whose notable clients include the Crown Prince of Saudi Arabia. This article is an excerpt from The Node, CoinDesk`s daily summary of key blockchain and crypto stories. You can subscribe to the full newsletter here. However, he warned that Ripple could win based on the legal obligation argument if it raises the case. Regulators often try to show the public that they crack down on supposedly bad actors after a financial disaster, said Gary DeWaal, former chair of financial markets and Katten Muchin Rosenman`s regulatory practice. Other crypto-related legal issues in addition to FTX`s demise have emboldened the SEC, he said. Alderoty then served as General Counsel at CIT Group Inc. – a financial services company sold to First Citizens BancShares Inc.
– and North American General Counsel at HSBC Holdings PLC. He also served as a litigator for American Express Co. and LeBoeuf, Lamb, Greene & MacRae, a precursor to a Manhattan law firm that became famous. Ripple`s two-year legal battle with the U.S. Securities and Exchange Commission (SEC) is coming to an end. The crypto company filed a response to the Commission`s appeal against its application for summary judgment. The SEC filed a lawsuit against Ripple and its current and former CEOs, Brad Garlinghouse and Chris Larsen, in December 2020, claiming that Ripple`s “continuous” sales of XRP constituted an investment contract and offering of securities.
