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Ripple vs. SEC settlement speculations mount as key hearing date approaches

TL;DR

  • Speculation swirls around a potential Ripple-SEC settlement as a key hearing nears, possibly involving burning $20+ billion in XRP tokens.
  • Given the $1.3 billion initial lawsuit, some doubt the feasibility, and experts question validator compliance.
  • Cardano’s Charles Hoskinson worries a settlement could label XRP a security, impacting other crypto projects.

Speculations regarding a potential settlement in the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) are intensifying as a pivotal hearing date nears. On February 12, a crucial examination of remedies briefing is set to take place in the SEC vs. Ripple case, sparking discussions within the crypto community. 

One prominent theory suggests that a settlement may entail Ripple incinerating its over 40 billion XRP tokens held in escrow, a move estimated to be worth over $20 billion.

Speculation and Parallels to SEC vs. LBRY Case

As the February 12 hearing date draws closer, the crypto community is abuzz with speculations regarding the potential settlement terms between Ripple and the SEC. One noteworthy theory circulating within the community suggests that Ripple may be required to burn its vast holdings of XRP tokens, totaling over 40 billion currently held in escrow.

 At the current market value of $0.51 per XRP, this would entail the destruction of over $20 billion worth of tokens.

This speculation parallels a previous legal dispute between the SEC and LBRY, where the SEC pursued a court order to prevent LBRY from engaging in cryptocurrency offerings until it disposed of all its LBRY Credits (LBC) tokens.

Contesting the plausibility

Despite these speculations, some online commentators argue against the feasibility of such a scenario in the Ripple case. They point out that the initial lawsuit against Ripple imposed a $1.3 billion charge on the payment company. 

According to these skeptics, incinerating over $20 billion in XRP tokens as part of settlement terms appears to lack logical coherence.

Furthermore, certain individuals, such as Simon Whitty, suggest that the validators would be the only entities with the authority to compel Ripple to burn its escrowed XRP tokens. However, Whitty asserts that such action by validators would be highly unlikely. 

Legal expert Bill Morgan has also weighed in, stating that while a judge could issue an order for the escrowed XRP to be burned, XRP Ledger validators would not necessarily be bound by such a directive.

Concerns raised by influential figures

In the midst of these speculations, influential figures in the cryptocurrency sphere, including Cardano founder Charles Hoskinson, have voiced their concerns regarding the potential ramifications of a settlement between Ripple and the SEC.

Hoskinson argues that if Ripple were to reach a settlement with the SEC, it would effectively imply an admission that XRP was, indeed, a security. He contends that while such a settlement might address immediate challenges for Ripple, it could also confer legitimacy and authority to the SEC to pursue similar arguments against other Layer 1 cryptocurrency projects. 

This concern underscores the broader implications a Ripple-SEC settlement could have on the cryptocurrency industry.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Benson Mawira

Benson is a blockchain reporter who has delved into industry news, on-chain analysis, non-fungible tokens (NFTs), Artificial Intelligence (AI), etc.His area of expertise is the cryptocurrency markets, fundamental and technical analysis.With his insightful coverage of everything in Financial Technologies, Benson has garnered a global readership.

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