As the cryptocurrency community awaits the summary judgment in the lawsuit by the Securities Exchange Commission (SEC) against blockchain firm Ripple, the case has taken a new twist with the potential to sway the final ruling significantly.
In particular, lawyer Bill Morgan in a tweet on April 7, revealed that the SEC’s expert had admitted that the prices of Bitcoin (BTC) and Ethereum (ETH) have been responsible for up to 90% of fluctuations in the value of XRP since mid-2018.
He suggested that if the SEC’s expert assumption is accurate, it could imply that Ripple is indirectly permitting the value of XRP to be influenced by the price fluctuations of Bitcoin and Ethereum. Therefore, by presenting evidence that Ripple’s price statements impact XRP’s value, the SEC attempts to demonstrate the assertion.
Notably, the fact that the value fluctuations of Bitcoin also impact the prices of most cryptocurrencies supports Morgan’s argument. Morgan also highlighted that the belief that Ripple’s significant holdings of XRP suggest centralization of the XRP Ledger and that XRP qualifies as a security persists.
It is worth noting that the SEC is suing Ripple for selling unregistered securities in the form of XRP tokens. As part of its defense, Ripple is pushing for unsealing of Hinman speech documents where the regulator referenced Bitcoin and Ethereum as securities.
Siding with SEC’s assertion on XRP value
Interestingly, Morgan sided with the SEC assertion that investors rely on Ripple’s legal endeavors to prevail in the SEC lawsuit. The attorney also clarified that investors do not count on Ripple’s commercial operations to generate profits from XRP but rather on the company’s legal efforts to emerge victorious in the SEC lawsuit.
“Paradoxically, the SEC may be correct about investors relying on Ripple’s efforts but not because of Ripple’s business efforts or sales of XRP but it’s legal efforts defeating the SEC’s lawsuit should it be successful,” he said.
Possible case outcome
Based on Morgan’s remarks, another pro-XRP lawyer, Jeremy Hogan, predicted an unforeseen outcome for the case. Hogan speculated that if the presiding judge decided to “split the baby,” she could rule that XRP sales after mid-2018 were not securities, as even the SEC recognizes that Ripple’s actions during that period had minimal influence on the token’s value.
“If the Judge in the Ripple case wanted to ‘split the baby’ (that’s a horrific phrase, isn’t it?), she could rule that sales of XRP since mid-2018 were NOT securities because even the SEC concedes that Ripple’s actions had almost no effect on XRP’s price since that point in time,” he said.
Hogan further pointed out possible implications of such a ruling suggesting that Ripple may be required to pay a fine and continue operating its business. Additionally, with XRP being the only cryptocurrency with a clear legal status, Hogan noted that it could influence the listing of digital assets on various trading platforms.
In the meantime, there continues to be speculation about the date for the summary judgment. Initially, some legal experts had projected the case ruling to occur during the first quarter of 2023.
Overall, the case ruling is expected to impact the value of XRP and the general crypto sector. Currently, XRP is trading at $0.51 with gains of about 1% on the weekly chart.
