Ripple Gains Strength as SEC Case Weakens, Making For Meaningful Upside

Ripple (CCC:XRP-USD) just looks stronger and stronger in its case against the Securities and Exchange Commission (SEC). If you believe in its utility as an overseas remittance service and payments network, now is the time to establish a position. 

A close-up shot of an XRP token with the logo and Ripple in raised text.
Source: Shutterstock

Like many others, I believe in Ripple because XRP is fast proving that it has real use cases in the alternative payments space. Users will continue to gravitate toward XRP because it doesn’t require pre-funding and it only requires a little more than three seconds to send a payment through its network. 

It’s easy to talk about companies like Banco Santander (NYSE:SAN), which are expanding through partnerships with RippleNet. Likewise, we can discuss the hundreds of other financial institutions that form Ripple’s network, serving to legitimize XRP. Meanwhile, investors in companies like MoneyGram (NASDAQ:MGI) should worry.

Strength of Ripple’s Case Is Clear

I believe all of that is true. And, if that’s true, then XRP should theoretically be much more expensive than it currently is. But that isn’t the case. The obstacle currently preventing XRP from rising much higher is none other than the SEC. Fortunately for Ripple, the strength of its case is becoming clearer: Ripple is looking more and more likely to prevail.

A lot of the current conversation in the ongoing saga relates to the so-called discovery process. Discovery is the process by which each party establishes evidence which can be used in the trial. And both parties, the SEC and Ripple, are seeking to establish evidence that reveals contradictory positions on the behalf of the opposing party.

SEC Seeks To Prove XRP Is a ‘Security’

In short, Ripple’s case continues to look stronger and stronger. The judge presiding over the case, Sarah Netburn, recently sided with arguments given by Ripple over those countered by the SEC. Judge Netburn will rule on procedures that govern the process on Sept. 28. 

There are a couple of key issues here. First, there is the issue of documents related to internal discussions within the SEC regarding Ripple and Ethereum (CCC:ETH-USD). The SEC has sought repeatedly to deny access to internal documents in which it discussed the status of XRP and ETH as securities. 

If those documents are entered as evidence in the trial, the SEC’s case is likely to be seriously damaged. The SEC has used something called deliberative process procedure to delay the opening of those documents as evidence. Judge Netburn has sided with Ripple three times regarding that issue. And it looks to be nearly a foregone conclusion that Ripple will prevail on that front. 

Those documents will likely prove that Ripple didn’t receive what is known as a fair use period. That would mean that the SEC didn’t provide Ripple enough time with which to become compliant if it is indeed to be considered a security. Judge Netburn has stated that Ripple’s CEO, Brad Garlinghouse, didn’t have any such belief prior to the SEC’s accusations that it was in 2020. 

The results of the procedure look to favor Ripple, bolstering its claims against the SEC. And while the SEC will likely lose on those previous fronts, it continues to battle on.

It is now seeking video and audio recordings of Ripple company meetings to prove that Ripple is indeed a security.

Let’s Go to the Video Tape

The SEC is hoping to gain access to video and audio of Ripple’s all-hands meetings in order to establish “efforts Ripple took to increase or maintain XRP’s price or to create expectations of profits in potential XRP purchasers, both of which are relevant… to prove whether XRP was offered and sold as a security,”

That will be one of the next hurdles Ripple will have to clear. For now potential and current Ripple investors should feel more confident given Judge Netburn’s rulings. 

The bigger picture here is that Ripple is looking better and better although the trial drags on and on.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

 


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