Late last week, American attorney James K. Filan, who has been following the SEC’s lawsuit against Ripple, explained to XRP HODLers and other interested parities why they should not be expecting some kind of settlement any time soon.
Filan is the founder of Filan LLC. He “represents individual and corporate clients in federal white collar matters, securities litigation, corporate and government investigations, complex civil and criminal tax controversies and complex civil litigation in both federal and state courts.” Filan also has nine years of experience as a federal prosecutor (in the United States Attorney’s Office for the District of Connecticut).
On 22 December 2020, the SEC announced that it had “filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.” The two Ripple executives being sued by the SEC were CEO Brad Garlinghouse and Chairman Chris Larsen.
The basis of Ripple’s defense against the SEC’s allegations is that it believes that XRP was never a security (since it fails the Howey Test, meaning that it is not subject to U.S. securities laws) and that even if the court comes to the conclusion that XRP was/is a security, there has been such a lack of regulatory clarity when it comes to crypto that Ripple is entitled to use the “Fair Notice” defense, i.e. that did not have reasonable fair notice from the SEC about whether its sales of XRP tokens would be deemed illegal sales of unregistered securities.
On July 30, American lawyer Filan took to Twitter to explain why he expects this lawsuit to take a long time to get resolved.
- Neither side seems to be willing to give an inch.
- The deposition of William H. Hinman, the SEC’s former Director of the Division of Corporation Finance, apparently has already happened (reportedly on July 27 even though it was originally scheduled for June 30).
- He believes that Ripple managed to get the names of the people to whom Hinman spoke (and what was said) prior to his famous speech in June 2018 and that Ripple must currently be “interviewing those people.”
- He doesn’t think “a settlement is coming anytime soon” in this “war” between the SEC and Ripple, which means that “we should settle in for the long haul.”
- Whichever party loses “will appeal the decision.”
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