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Ripple says he has no plans to settle with the SEC

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Ripple’s legal team has no intention of reaching an agreement on its lawsuit with the US Securities and Exchange Commission (SEC), according to a recent statement.

Ripple is being sued by the SEC for allegedly selling XRP as an unregistered security since 2013. The main US financial regulator also alleges that XRP remains an unregistered security to this day.

Fox Business correspondent Charles Gasparino told his 114,000 Twitter followers that the San Francisco-based payments company informed to the media that it was not planning a deal with the SEC – and that they may prove inconsistencies in the policies of SEC President Gary Gensler.

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“Ripple’s legal team tells @FoxBusiness that they have no plans to settle with @SEC_Enforcement over the XRP process, confident they can show that GaryGensler is picking winners and losers in the #Crypto business over innovation.”

However, jurist and cryptocurrency expert Jeremy Hogan, who covered the process closely, observe that “legal teams NEVER say they want a settlement” because that would be “a sign of weakness”.

Last month, Hogan said that while many XRP investors expect a settlement sooner or later, the slow nature of the legal process means the process should drag on at least until early 2022.

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He noted that the expert-search phase of the case doesn’t end until November, which means it can be difficult for either party to negotiate a settlement if they don’t already know the extent of the other party’s case.

“The problem with a deal between now and Nov. 12 is that the parties won’t know how strong each side’s position is until the discovery closes. So even if we’re looking at a million dollar deal, how many million are we talking about? 10? 20? 200? Thousand?

Do you think Ripple won’t mind the difference between paying $20 million and $200 million? I think any company cares about that and is willing to wait a few more months to potentially save millions of dollars.”

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XRP Lawsuit: Ripple says discovery deadline extension would be ‘severely prejudicial’

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The lawsuit filed by the United States Securities and Exchange Commission (SEC), against blockchain company, Ripple Labs for selling unregistered securities is inching closer to being a year old while showing no signs of settling soon.

Even as the SEC is trying to delay deadlines fixed earlier by the court, Ripple is putting in similar efforts to wrap up the case as quickly as possible. In a motion opposing the SEC’s previous request for a deadline extension on fact discovery to 12 January, the defendant asked the court on 19 October that the SEC’s proposal be denied on several grounds.

Ripple agreed to extend the deadline for rebuttal, expert reports to 12 November even as it “is prepared to meet the original schedule.” Further, the firm proposed that the deadline for expert depositions be extended no further than 10 December, as this would provide sufficient time between the two procedures.

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Ripple has claimed that before the SEC filed its motion for an extension on 15 October, both parties had sought to reach an agreement without court intervention. Further, the SEC had originally proposed extending the close of expert discovery to 22 December, which Ripple had agreed to despite being able to meet the original deadline set by the court.

With the SEC changing its tune, Ripple sought the court’s help in preventing the lawsuit from being prolonged further. The court itself had frowned upon permitting further delay after the previous deadline extension for discovery.

The main reason behind Ripple’s opposition is the fact that “further delay would prejudice Ripple and the market for XRP.” Highlighting the losses garnered by the company since the beginning of the lawsuit, the letter stated,

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“The pendency of this lawsuit has significantly hurt the markets for XRP, especially in the United States. Ripple’s cross-border payment product relies on liquid XRP markets.”

It added,

“Within days of it filing its suit, almost 20 exchanges de-listed or suspended XRP trading in the United States, and more have since followed suit, critically damaging the market for XRP. This is severely prejudicial to Ripple’s business.”

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However, the regulatory authority insisted that Ripple has “continued robust sales of XRP” along with experiencing price rises during the pendency of the litigation. The defendant stated that its overseas business and markets showed resilience during this time, which in no way meant that Ripple and XRP’s markets were not “severely damaged by the pendency of this lawsuit.” It further stated,

“Indeed, although the price of XRP has risen in the last year along with the broader digital currency market, its performance has lagged behind the market, including currencies like bitcoin and ether.”

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Ripple CEO Comments on Prospects of XRP ETF in U.S.

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Ripple CEO Brad Garlinghouse believes that the SEC is deliberately picking winners and losers

Ripple CEO Brad Garlinghouse lamented the U.S. Securities and Exchange Commission for picking winners and losers when asked about the prospects of an XRP exchange-traded fund launching in the U.S. by Fox Business’s Charles Gasparino during an Oct. 18 interview:

Why is the SEC picking winners and losers?

Garlinghouse went on to mention that Bitcoin has “massive” power consumption.

Hence, prioritizing Bitcoin doesn’t sit well with SEC Chair Gary Gensler’s climate agenda, according to the Ripple boss. Earlier, he mentioned that XRP is 100,000 times more efficient than the largest cryptocurrency, estimating that only one Bitcoin transition consumes 75 gallons of gasoline.    

In addition, Garlinghouse is concerned about Gensler’s silence on the regulatory status of Ether, the second-largest cryptocurrency.

There are several pending Ether ETF filings in the U.S. that are waiting for the regulator’s nod.

In the meantime, ProShares Bitcoin Strategy ETF, the first approved Bitcoin futures ETF, is set to start trading on the New York Stock Exchange.   

Garlinghouse says that it’s “ironic” how the SEC fights for disclosures and clarity but fails to reciprocate when it comes to its own actions:

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What we seek more than anything is clarity and certainty.          

As reported by U.Today, an XRP exchange-fund product (ETP) was listed on Zurich-based SIX Swiss by crypto asset management firm CoinShares this April.

However, Swiss crypto money manager 21Shares moved to remove XRP from the list of its ETP products after the SEC sued Ripple, alleging that the cryptocurrency is an unregistered security.

Ripple is not willing to settle

According to Gasparino, Garlinghouse said that Ripple wouldn’t settle if XRP were deemed a security.

The most recent comment echoes the executive’s earlier statement about how there should be “absolute certainty” about the cryptocurrency’s regulatory status:

There is no scenario though when we gonna settle unless there is absolute certainty about what is XRP on the go-forward basis.

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RIPPLE’S ALDEROTY QUESTIONS SEC EXTENSION REQUEST, MR. HOGAN SAYS JUDGE WILL “SPLIT THE BABY”

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As the lawsuit is again at risk of extending deadlines potentially for summary judgment, Mr. Hogan was clear that the SEC v Ripple has an end in sight.

The SEC has requested the court to extend the expert rebuttal report deadline to November 12, 2021, and the expert discovery deadline from November 12, 2021, to January 14, 2022.

The agency says the parties need sufficient time to prepare rebuttal reports and depose a minimum of 14 expert witnesses.

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The plaintiff added that Ripple consents to an extension of the rebuttal report deadline until November 12, but opposes the January 14 deposition deadline.

Ripple’s General Counsel Stuart Alderoty commented on the SEC request as something quite unusual. “Every litigator will tell you it’s always the defendant – never the plaintiff – asking to delay proceedings. Why would any plaintiff, let alone one with unlimited resources, play the delay card?”

JUDGE TORRES SAID “COURT IS NOT INCLINED TO PERMIT FURTHER DELAY”

According to the SEC, Ripple intends to file its opposition to this letter motion on October 18, 2021. The SEC offered a compromise that expert discovery be completed by December 22, but Ripple also rejected that offer.

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It seems that the blockchain firm believes that such an extension would disrupt the briefing schedule for summary judgment motion(s), which would likely affect the end of the lawsuit.

The XRP community has quickly responded to the SEC’s request and Twitter user @XRPMoonOrBust pointed to Judge Analisa Torres’ order denying the XRP Holders’ motion to intervene (while granting the Amicus Curiae status).

The ruling was on the grounds that “discovery in this action has already been extended… and the Court is not inclined to permit further delay by granting intervention and prolonging discovery…”

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HOGAN EXPECTS ONE MORE MONTH AND LAWSUIT TO END IN SUMMER AT THE LATEST

Jeremy Hogan, an XRP-friendly lawyer, has commented on the request as well: “What’s clear from this motion to extend discovery out 2 more months is that the SEC filed this $1.4 Billion dollar lawsuit without setting aside the resources to prosecute it. If the judge grants it, the main parts of the case won’t be decided until March-May of ’22!”

“My instinct, without having read Ripple’s reply, is that the judge splits the baby and provides an additional month to expert discovery. Judges never want an appellate court to hear lack of “due process” arguments on a case”, he continued.

As the lawsuit is again at risk of extending deadlines potentially for summary judgment, Mr. Hogan was clear that the SEC v. Ripple is likely to end in the first half of 2022, summer at the latest.

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“The case will be over by summer at the latest. An appeal could take 9-12 months to be decided but while the appeal is going on, the trial judge’s ruling is “the law”.”

GRANTING MOTIONS TO COMPEL REQUIRE ADDITIONAL TIME

The SEC wants the extension because expert discovery has commenced with an incomplete factual record, and the case is even less ready for summary judgment motions.

“First, on September 1, 2021, Magistrate Judge Netburn granted the SEC’s motion to compel Ripple to produce certain instant messages among its employees, but Ripple has not completed its production of responsive documents and has not provided any timetable by which it will be complete.

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“Second, the parties have four discovery motions currently pending before Magistrate Judge Netburn: (i) Defendants’ motion to pierce the SEC’s deliberative process privilege and other privileges as to many of the SEC’s internal communications and communications with other law enforcement agencies (which will not be fully
briefed until October 22, 2021); (ii) the SEC’s motion for a protective order relieving it from answering over 29,000 requests for admission that Defendants served on the SEC in the last six hours of fact discovery; (iii) Ripple’s and Larsen’s motion to compel further responses to certain interrogatories; and (iv) the SEC’s motion to compel Ripple to conduct a reasonable search for and produce certain video recordings of internal staff meetings involving Individual Defendants and key executives.

The plaintiff added that if Magistrate Judge Netburn grants any of the pending motions to compel, at minimum, the parties would need additional time to review and produce the documents at issue.

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