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What might a settlement in the XRP lawsuit look like?

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Despite a wave of motions and replies over the last few weeks, talks of a settlement between Ripple Labs, its execs, and the United States Securities and Exchange Commission are never far away. In fact, the same was referred to recently by attorney John Deaton when he claimed that,

“While the trial lawyers are fighting it out and arguing over almost everything, the settlement lawyers are kicked back trying to find a path of least resistance.”

Now, let us assume that these lawyers have successfully been able to keep the intensity of the lawsuit behind them to push out a settlement. What will such a settlement look like? Attorney Jeremy Hogan is the latest to take a crack at this question, with Hogan asserting that such a likelihood can only be entertained if the settlement involves clauses that satisfy both parties.

Both parties, the attorney argued, will want different results from such a settlement. According to Hogan, the SEC, for instance, will want to put an end to this lawsuit without any damage to their “street cred” with other crypto-companies. This will include not only language enjoining Ripple from any illegal sales in the future, but also a civil penalty to show that “Ripple did something wrong.”

Then, there’s the question of disgorgement. Now, this was something very specific the agency sought when it first charged the San Francisco-based blockchain firm. In fact, Hogan himself had alluded to the same being a key part of the SEC’s prosecution during an interview a few months ago.

However, in the present day,

“There’s just no way to fairly “disgorge” profits to investors because there’s no way of fairly knowing who to “disgorge” to. How would you even come up with a plan to disgorge say a billion dollars that Ripple pays – to who? Plus, there’s that small problem that it was literally your lawsuit that caused the most damage.”

What about the defendants then? According to Hogan, first and foremost, Ripple would want assurances that it will be able to maintain its business and ODL, with the civil penalty not being significant enough to induce bankruptcy.

The first is a particularly significant assurance, especially since in the past both Garlinghouse and Larsen have bemoaned the lack of regulatory clarity in the United States to hint at a move abroad. It’s worth noting, however, that in a later interview, when the narrative took an “us v. them” turn, the Ripple exec was quick to say that he is “committed to San Francisco.”

What’s more, the firm would want much-needed clarity going forward, clarity on the status of XRP, a development that will tell the secondary market that the “SEC thing” is well and truly over. Such clarity, ideally, should be enough to give exchanges the confidence to re-list XRP.

Here, it’s worth noting that Hogan also entertained two other possibilities, each of which wouldn’t exactly be in the best-case scenarios for XRP or Ripple. These included possible limitations on the sale of escrowed XRP and Ripple being restricted to private sales to only companies and clients, the latter of which can be expected to “bottleneck the flow of XRP into the market for years.”


Jibin Mathew George is Editor-in-Chief at AMBCrypto. A domain expert in International Relations (European Politics), he has always been a believer in the unlimited possibilities afforded by blockchain and by extension, cryptocurrencies. As someone who has been watching and writing about this space for over 5 years now, Jibin has closely tracked the emergence of cryptos and digital assets as a separate asset class in portfolios world over. A lawyer by training, he previously contributed to the News and Research desk of Diplomacy & Beyond Plus. Before his stint at D&B, he was Editor at ED Times. Jibin also takes a great interest in politics, especially the corresponding effect political decisions and fiscal policy have on the world of finance, with a special focus on cryptocurrencies.
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