Former SEC official predicts regulator will 'lose on the merits' of case against Ripple

A former Securities and Exchange Commission executive believes the regulator has a good chance of losing its $1.3 billion lawsuit against...

A former Securities and Exchange Commission executive believes the regulator has a good chance of losing its $1.3 billion lawsuit against Ripple “on the merits” of the case.

Attorney Joseph Hall also expressed concerns about what the SEC’s endgame could be regarding the high-stakes case against Ripple (XRP), which will have ramifications for the entire industry.

The trial alleged that the company and its co-founders, Brad Garlinghouse and Christian Larsen, did not notify the SEC of its sale of XRP from 2013, and that the tokens are unrecorded titles. The SEC is trying to prove that the securities fraud took place as a result.

hall, a old Managing Executive for Policy at the SEC appeared on the Thinking Crypto podcast with host Tony Edward on February 22 where he said:

“I’m not entirely sure what the SEC plans to prove in the XRP litigation.”

The implications for the SEC and for the crypto industry as a whole are enormous. As Hall puts it, “the SEC has a lot to do” with the case, and “their entire regulatory scheme could be pretty much shut down if they lose on the merits” of the case.” He continued:

“And I still think there’s a good chance that (the SEC) will lose on the merits.”

Hall thinks Ripple has a strong defense based on the SEC did not give reasonable notice of his investigation. The SEC is required to notify individuals and corporations that they are under scrutiny.

“I am very sensitive to this argument. This is a fundamental argument of due process. The Ripple network had been operating for years before a last-minute lawsuit was filed against them.

Another lawyer who has been following and commenting on the Ripple case for some time, Jeremy Hogan, also believes that Ripple’s fair notice defense will be strong enough to keep it out of the proverbial fire. In a February 23 tweet, he cited a case precedent SEC sued Library Credits (LBRY) last March, which was hit because the SEC failed to give reasonable notice.

Related: Binance.US Investigated by SEC Over Trading Affiliates: Report

The Ripple case could have effects that would set the tone for investigations and litigation in cryptocurrency cases for the foreseeable future once a decision is made. If the SEC wins, it could trigger a deluge of new investigations and lawsuits against crypto projects. If Ripple wins, it could force the SEC to drastically scale back attempts to sue the crypto industry.