Ripple Labs vs. SEC: Scheduling Order Marks New Phase in XRP Battle

Magistrate Judge Sarah Netburn’s scheduling order has brought a new direction to the Ripple vs. SEC case.
Ripple Labs is contesting the SEC’s severe penalties and is advocating for a settlement of $10 million.
In a recent development, Magistrate Judge Sarah Netburn, who has been appointed as District Judge, has issued a new scheduling order in the ongoing lawsuit between Ripple Labs and the SEC. According to a report by CNF, this order sets deadlines for the SEC to respond to Ripple’s motion to dismiss expert submissions by April 29, 2024. Ripple will then have three business days to respond. This is a crucial moment in the case, indicating a more intense phase of legal proceedings.
Ripple’s Position on Penalties and XRP Classification
As discussed in today’s CNF YouTube update, Ripple Labs is challenging the SEC’s demand for substantial civil penalties and instead proposing a more reasonable penalty of $10 million. Ripple argues that the SEC lacks evidence to support its claims and asserts that its On-Demand Liquidity (ODL) sales should not be classified as investment contracts. Instead, Ripple states that ODL sales are primarily used for facilitating cross-border payments, which contradicts the SEC’s perspective of XRP as an investment. Ripple asserts that there has been no demonstrated financial harm or risk of future violations, citing the Govil case to support their argument.
Public and Legal Perspectives on ODL
A crucial aspect of Ripple’s defense revolves around the functionality of its ODL service. Ripple argues that ODL transactions are not investments but rather transactional in nature, as XRP is held for only a few seconds to facilitate cross-border payments. This positions ODL as a tool for efficient transactions rather than an investment vehicle. Legal commentator James K Filan recently highlighted this in a tweet, sharing information about the ongoing legal maneuvers related to Ripple’s motion to strike new expert materials submitted by the SEC.
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Magistrate Judge Netburn has issued a scheduling order concerning @Ripple’s Motion to Strike new expert materials that the SEC submitted in support of its Motion for Remedies and Entry of Final Judgment. It can be seen below. pic.twitter.com/BglOzE5pl4 — James K. Filan (@FilanLaw) April 25, 2024
In discussions on social platforms like X, blockchain advocate Bill Morgan recently emphasized that ODL transactions should not be considered investment contracts. He explained that ODL customers are essentially engaging in a swift exchange of XRP for fiat currency to carry out low-cost money transfers, not to invest in XRP.
Current Market Response
Amidst these legal and regulatory discussions, XRP has exhibited resilience in the market. Currently, XRP is trading at $0.5333, showing a 1.23% increase in the last day and a 10.24% increase over the past week. This upward trend reflects cautious optimism from investors regarding the outcome of Ripple’s legal challenges.
These strategic legal defenses and Ripple’s unwavering stance against the SEC’s allegations play a crucial role in shaping the future of XRP and its classification within the broader landscape of cryptocurrency regulations.