JW Verret has outlined in an interview with John E. Deaton why XRP owners should hope for a “thin victory” for Ripple against the US Securities and Exchange Commission (SEC). A former member of the SEC’s Investor Advisory Committee and an associate law professor at George Mason University in securities law also explained that the agency would be surprised by the uphill battle with Ripple.
Verret shared his views on CryptoLaw’s live broadcast, where Deaton also asked his partner why the SEC singled out Ripple in particular, despite it being one of the best-funded companies in the crypto industry. CEO Brad Garlinghouse once said that when the last word is spoken, Ripple will spend $100 million in legal fees.
A former SEC counsel responded that the agency is downplaying the fight and may be looking forward to a settlement. However, considering the way things have been done, this is a far-fetched prediction, he said.
I don’t think they saw that coming and I think they probably expected a settlement. He underestimated the battle inside Brad.
This is why XRP Holders should expect “Thin Wins” For Ripple
According to Verret, there is a very high probability that the losing party in SEC vs. Ripple Labs Inc. If that happens, the case could be the vehicle through which the US Court of Appeals for the Second Circuit and the US Supreme Court will reshape the administrative law for crypto itself.
However, the path from the appeals court to the Supreme Court can take four to five years, according to law professors, assuming that an appealable summary judgment is granted. The only case where Ripple wins and the SEC doesn’t draw attention is when the fintech wins based solely on the “Fair Notice” argument, according to Verret.
“I think it’s better to win just by fair argument, […] which obviously will have much less implications for the following cases. And the SEC won’t challenge it, I think. If he loses, it doesn’t cause problems in other cases, so he can lie,” said Verret and continued to explain:
But if the win is bigger, the SEC will quickly appeal. So in some sense if you own XRP, you almost want to win very thin – win on fair news alone.
Continued litigation in higher courts could mean more than five more years of regulatory uncertainty and thus a continued depressed token price for XRP holders. On the other hand, Verret believes that Ripple and other crypto companies will have a chance of success in appeals and before the Supreme Court.
The reasoning behind this is that the Supreme Court has ruled that federal agencies seeking to determine issues of national importance must do so with express authorization from Congress. This was referred to by the lower appellate court as the “Primary Question Doctrine.”
Important to this is the case of West Virginia v. US Environmental Protection Agency, where the sentence was first used by the Supreme Court in 2022. According to Verret, the Supreme Court had previously applied the doctrine in several decisions.
Among others, the “Primary Question Doctrine” was applied in 2000 in FDA v. Brown & Williamson Tobacco Corp. and in 2006 in Gonzales v. Oregon. And the crypto industry together with the Howey test could be a prime example of another application, according to him.
Due to the lengthy process, Verret concluded:
Ultimately, the SEC’s discretion to regulate crypto may be limited by the primary question doctrine. Until then, this hope will prove little consolation to aspiring crypto entrepreneurs and those who just want to know the rules of the road.
At press time, the price of XRP is at $0.3701, continuing the downward trend that began at the end of January.
Options images from CNBC, charts from TradingView.com