Most XRP Holders Expect The SEC Case Against Ripple To End In A Settlement

XRP holders believe the SEC will seek a settlement in the 2-year-long legal battle.

Most XRP holders expect the US Securities and Exchange Commission to seek a settlement in its case against Ripple, per a Twitter poll by pro-XRP lawyer John E. Deaton.

In 2023 the @SECGov ? @Ripple case:

— John E Deaton (@JohnEDeaton1) December 28, 2022

At the end of the poll, which Deaton launched on Wednesday, 59.2% of the over 18,000 voters predicted an out-of-court settlement in the case in 2023, while the remaining 40.8% said it would end with a court ruling. 

For context, in December 2020, the SEC filed a complaint against Ripple, accusing the blockchain payments platform and its executives of offering and conducting sales of an unregistered security, XRP.

While the poll alone gives little insight into why XRP holders expect a settlement, it is worth noting that many now believe that Ripple may have backed the SEC into a corner with the Hinman documents.

William Hinman, in a 2018 speech, as an SEC director, asserted that Bitcoin and Ethereum are not securities. Consequently, Ripple attorneys seeking to understand how the director came to this conclusion and why the regulators treated XRP differently requested documents and emails on the draft of the speech but faced stiff resistance from the SEC.

The regulator asserted that these documents are protected by attorney-client privilege, but after being denied 6 times in 18 months by 2 judges, handed over the documents to Ripple in October. 

However, the SEC is making one last-ditch effort to ensure these documents do not become a matter of public record, per its latest Omnibus motions to seal documents associated with summary judgment motions. The strong desire to keep the Hinman documents private has aroused intense curiosity and suspicion about the contents. Consequently, some XRP community members suspect that the SEC may be forced to seek a settlement with Ripple to keep these documents out of the public eye if the court denies its Omnibus motion. 

Stuart Alderoty, Ripple’s general counsel, implied that Ripple had a stronger case after getting their hands on the documents asserting that it was “well worth the fight.”

Recall that Ripple’s chief executive officer Brad Garlinghouse asserted that Ripple would only settle if the SEC provided clarity for XRP. Consequently, an out-of-court settlement is potentially favorable for the XRP community. 

However, this is the last thing the broader crypto community wants. Gokhstein media founder David Gokhshtein has described it as the worst possible outcome, touting an outright Ripple win as the preferred choice. This is because while it provides clarity for XRP, it does not force the regulator to bring clarity to the rest of the crypto markets.

Notably, there have been 2 rumors of a settlement in as many months, both debunked by FOX Business reporter Eleanor Terrett. 

While a settlement can not be completely ruled out, it is unlikely at this point, according to pro-XRP attorney Jeremy Hogan, who has followed the case closely. Barring a settlement, attorney James K. Filan predicts that the judge will give her ruling before or at the end of March 2023.