As Ripple prepares for its “community celebration” on September 29 in New York City, speculation has been rife about whether the event will feature significant announcements like an IPO or a full settlement with the U.S. Securities and Exchange Commission (SEC). John Deaton, an American who has been closely monitoring the SEC v. Ripple Labs lawsuit (initiated in December 2020), has dismissed these speculations, stating that neither an IPO nor an SEC settlement is likely to be announced at the event.
On July 13, District Judge Analisa Torres delivered a mixed ruling in the case. While she granted the SEC’s motion for summary judgment on Ripple’s Institutional Sales of XRP, she denied the SEC’s claims concerning other types of XRP sales. Specifically, the court ruled that Ripple’s Programmatic Sales, Other Distributions, and sales made by executives Brad Garlinghouse and Chris Larsen did not constitute offers and sales of investment contracts. Judge Torres stated that XRP, as a digital token, is not inherently a “contract, transaction, or scheme” that fulfills the Howey requirements of an investment contract.
However, it’s crucial to note that the legal battle is far from over. A Pretrial Scheduling Order filed on August 9 revealed that preparations for a jury trial involving Ripple, Garlinghouse, and Chris Larsen are underway. Judge Torres has set a tentative trial period between April 1 and June 30, 2024. Furthermore, on August 18, the SEC filed a motion to certify for interlocutory appeal, indicating that the regulatory body is not backing down.
On August 28, Ripple Labs and its CEO, Brad Garlinghouse, announced a “community celebration” for September 29 in New York City.
John Deaton’s reasoning for stating that neither an IPO nor an SEC settlement is likely to be announced at Ripple’s upcoming event is based on the ongoing legal complexities between Ripple and the SEC. Deaton points out that the SEC is still seeking a permanent injunction against Ripple Labs concerning future sales of XRP to institutional investors. He also notes that the SEC aims to secure a similar injunction against Ripple CEO Brad Garlinghouse and Chairman of the Board Chris Larsen.
According to Deaton, these ongoing legal challenges make it improbable for the SEC to approve a Ripple IPO, as the SEC is the only body with the constitutional authority to allow a U.S. company to go public. Given the current circumstances, Deaton believes the agency is unlikely to grant its approval for Ripple’s IPO.
As for the possibility of a complete legal settlement between Ripple and the SEC, Deaton suggests that it’s also unlikely in the near term. He believes that any chance of a settlement would depend on the outcome of a separate legal case involving Coinbase and the SEC. Until that issue is resolved, Deaton posits that a settlement between Ripple and the SEC remains off the table.
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