Former SEC official foresees regulator’s defeat in Ripple lawsuit

Former managing director for policy at the SEC said regulators face a high likelihood of losing on the merits of the Ripple case. The regulator accused the company of selling unregistered securities worth $1.3 billion in XRP.

In a Thinking Crypto podcast, the lawyer who left the Commission in 2005 and joined Davis Polk as a partner said:

"I'm not sure the SEC plans to prove it through the XRP case. I'm still puzzled as to why the Commission even needed this case. The entire regulatory project could fail if it loses on the merits. And I think there are good odds for that."

According to him, a strong defense for Ripple lies in the regulator's failure to provide proper notice of its investigation. The SEC is required to inform individuals and corporations of claims brought by the agency.

"I like that argument — it's central to due process. The Ripple network had been operating for years before the lawsuit was filed at the last moment," Hall said.

After the completion of the information disclosure phase, he expects "more substantial steps" from the court during 2022. However, the case is unlikely to be concluded within that timeframe, the lawyer said.

Earlier, Ripple CEO Brad Garlinghouse allowed a settlement of the litigation with the SEC in 2022.