Ripple Labs received somewhat of a reprieve this week in their legal battle with the SEC. The Securities and Exchange Commission proposed a settlement of $2 billion but later lowered it to $102.6 million.
Although this is a major reduction, Ripple still has a tough choice: agree to the settlement and live with the legal ambiguity of XRP, or go to court and potentially lose horribly.
The penalty issued by the SEC in the amount of $2 billion at the beginning of its activity was a real surprise for the cryptocurrency market. Ripple counter-sued with an offer of $10 million claiming that the SEC’s previous settlements were between 0.6% and 1.8% of the defendant’s revenue.
But the SEC continues to argue that the reduced $102.6 million settlement is still mandatory to ‘send a message to other actors in the cryptocurrency business that such conduct will not be tolerated’. Ripple has a difficult choice to make.
Accepting the settlement would provide them with immediate cash savings, and demonstrate compliance with the regulators. However, it would not clarify the legal status of XRP as security which could be an issue for institutional investors and impact the price of XRP.
Failure to accept the settlement could mean going to court for a long time with an unpredictable result that could be even more expensive. An actual judge could give a penalty that is far worse than what the SEC is offering at the moment.
This is especially the case given the fact that the SEC has recently come up with a new offer for a settlement in this rather long-standing story. It depicts that the SEC could be willing to bargain, after displaying a hard-line posture at first.
The final payment which may be the current $102 million or any other amount agreed between the parties may help to define the further actions of the SEC in the enforcement of the law in the world of cryptocurrencies.
This case has rather broad implications for the whole crypto industry. Ripple’s strategy in this legal fight will not only impact them but also shape the future actions of other cryptocurrency firms concerning security offerings and regulators.
The resolution’s clarity may contribute to stability and better ties between the SEC and the cryptocurrency industry. But, this legal dispute might drag on for a while, and even if Ripple loses, it might harm future cryptocurrency regulations.
