Is Another Landmark Ripple vs SEC Saga Loading? — Here’s What This Prominent Attorney Has To Say

The Looming Shadow: Is the SEC Preparing Round Two?

The crypto community is once again on high alert as speculation mounts regarding a potential new legal front in the long-running battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC). Following the landmark July 2023 ruling that largely favored Ripple—declaring programmatic sales of XRP on exchanges not to be securities—investors believed the worst was behind them. However, fresh analysis from prominent crypto attorney John Deaton suggests the SEC is not done yet.

Deaton, a vocal advocate for the XRP community, has raised the possibility of a “Landmark Ripple vs SEC Saga 2.0.” While the initial lawsuit focused on sales prior to 2020, the SEC is reportedly eyeing a strategy to target sales of XRP that occurred after the original complaint was filed.

The Legal Nuance: Post-Complaint Sales Under Scrutiny

The core of the potential new case lies in the timeline of Ripple’s operations. The previous summary judgment drew a line in the sand: programmatic sales to the general public did not constitute investment contracts. However, institutional sales to sophisticated investors were deemed violations of securities laws.

According to Deaton, the SEC’s next move could involve a “continuing violation” theory. This argument posits that Ripple’s sale of XRP to institutional investors after the lawsuit was filed in December 2020 constitutes a new, separate violation. If the SEC proceeds with this action, it would effectively force the courts to rule on whether the company’s ongoing distribution of XRP remains subject to securities regulations, despite the 2023 ruling.

Ripple’s Defense and the Hinman Documents

Ripple’s legal team remains confident, banking on the controversial “Hinman documents”—internal SEC communications regarding the 2018 speech by former Director William Hinman, who declared Ethereum a non-security. Ripple argues these documents prove the SEC lacked fair notice and acted arbitrarily.

However, a new lawsuit regarding post-2020 sales would likely bypass the Hinman speech controversy and focus strictly on contract law. If Ripple continued to sell XRP to institutions under contracts that referenced the asset as an investment, the SEC could argue these contracts, regardless of the Hinman speech, created an expectation of profit based on Ripple’s efforts.

Market Impact and XRP Price Analysis

While the legal theory is complex, the market psychology is straightforward: uncertainty breeds volatility. XRP has historically shown resilience, often decoupling from broader market trends during legal developments. However, the prospect of a new, protracted lawsuit could act as a ceiling for the asset’s price in the short term.

Institutional investors, generally risk-averse, may hesitate to engage with XRP until the regulatory status is permanently settled. Conversely, the “XRP Army”—the asset’s loyal retail base—may view any dip resulting from renewed legal fears as a buying opportunity, anticipating a final victory that sets a definitive precedent.

Conclusion: A Necessary Final Battle?

While the idea of a new lawsuit is daunting, some analysts believe it may be a necessary evil. A second case could provide the judiciary with the opportunity to address the remaining ambiguities in crypto regulation. If Ripple were to win a second case regarding post-2020 sales, it would effectively render the SEC’s enforcement strategy against the company null and void.

For now, the crypto world watches the SEC’s docket closely. Whether this is a bluff to force a settlement or the opening salvo of a new legal war, the outcome will likely define the regulatory landscape for crypto assets in the United States for years to come.