- Chris Giancarlo, former CFTC chairman, predicted that the SEC would drop its case against Ripple following Gary Gensler’s departure as SEC chair
- Giancarlo said he would bet that the SEC drops the Ripple case after Gensler leaves
- The SEC filed a notice of appeal in the Ripple case last month, and Ripple filed a cross-appeal
The U.S. Securities and Exchange Commission (SEC) is expected to drop its long-running lawsuit against blockchain company Ripple Labs and its XRP cryptocurrency, according to comments made by Chris Giancarlo, former chairman of the Commodity Futures Trading Commission (CFTC).
Background of the Ripple Case
In December 2020, the SEC filed a lawsuit against Ripple Labs, alleging that the company’s sale of XRP was an unregistered securities offering worth over $1.38 billion. This has led to a protracted legal battle between the SEC and Ripple over the past two years.
The lawsuit argues that XRP should be classified as a security instead of a currency. If XRP is deemed a security, Ripple would have needed to register its XRP sales and distributions with the SEC.
Ripple maintains that XRP functions as a currency, similar to Bitcoin and Ether, and should not be subject to securities laws. The outcome of the case could have major implications for the status of XRP specifically and the crypto industry as a whole.
Prediction That the SEC Will Drop the Case
In a recent interview with Fox Business, Chris Giancarlo said he would “bet” that the SEC drops the Ripple case, particularly with the impending departure of SEC Chair Gary Gensler in January 2023.
Giancarlo chaired the CFTC from 2017-2019 and has argued for a more nuanced regulatory approach to crypto assets that accounts for differences between tokens. With a new head of the SEC expected to bring a more crypto-friendly stance, the agency may not want to continue the resource-intensive battle with Ripple.
Ripple General Counsel Stuart Alderoty has also said that the new SEC chief should dismiss all non-fraud crypto cases on day one. The company and the broader crypto industry will be hoping for a reset of the SEC’s stance on digital asset regulations.
Conclusion
After over two years of litigation, the SEC’s lawsuit against Ripple Labs over XRP may be nearing its end game. With SEC Chairman Gensler departing and signs of a shift in the SEC’s strategy, the agency could decide to drop a case that has been closely watched in the crypto space. The outcome of the Ripple-SEC clash will have key significance for the regulatory treatment of cryptocurrencies going forward.
