Ripple’s chief legal officer outlines possible outcomes for upcoming SEC case

Ripple’s Chief Legal Officer Stuart Alderoty outlines various scenarios that could arise regarding the outcome of the legal dispute between Ripple and the U.S. Securities and Exchange Commission.

In an Although he believes the SEC is hoping for remand, the chances of that happening are “a long shot” at best.

“2. Secret. He will either confirm Judge Torres or extend his decision. “The best the SEC can hope for (and it’s a distant hope) is detention,” Alderoty said in his post.

Ripple’s (XRP) Chief Legal Officer elaborated further, saying that Judge Torres declared during the SEC’s unsuccessful interlocutory appeal that his initial decision stood firm, including all of Ripple’s defenses and the important Fair Notice argument.

2. Sir. He will either confirm Judge Torres or extend his decision. The best the SEC can hope for (and it’s a distant hope) is detention.

However, during the SEC’s unsuccessful ‘interim’ appeal, Judge Torres ruled that all of Ripple’s defenses, including ‘Howey’ and Fair Disclosure, were… pic.twitter.com/TWDlJ3bE4d

— Stuart Alderoty (@s_alderoty) October 20, 2024

The Fair Notice argument raises the question of whether a person of “ordinary intelligence” can understand what the law prohibits. If the case is postponed, this defense can be brought back to court along with other arguments.

This means the SEC may have to argue that Judge Torres did not meet the “ordinary intelligence” standard because he ruled against them. Promoting what Alderoty calls an “awkward” situation.

He went on to compare the case to Herman Melville’s Moby Dick, in which SEC Chairman Gary Gensler plays Captain Ahab, who becomes obsessed with killing the whale Moby Dick after he takes his leg. This time, he adds, the current conditions are similar to the courtroom comedy My Cousin Vinny.

Alderoty confirmed in a separate X post last week that the SEC is not appealing the court’s ruling that XRP is not a security. The SEC filed a Form C civil appeal asking the court to review the application of the law in the earlier summary judgment.

In this case, the SEC asked the court to reconsider the decision to sell XRP tokens on exchanges, as well as the personal sale of the token by Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. In an interview with Fox Business, Alderoty stated that the case could continue until July 2025. On October 10, Ripple filed its own cross-appeal to challenge the decision regarding institutional sales.

The case began in December 2020, when the SEC filed a lawsuit against Ripple Labs, accusing the tech company of orchestrating the unfair sale of $1.3 billion worth of XRP tokens, which were deemed unregistered securities by the SEC. The SEC also alleged that XRP creates certain profit expectations for investors, which meets the criteria to be classified as a security.