The SEC vs Ripple is the biggest crypto stoush since that bloke who spent 10,000 Bitcoin on two pizzas punched a wall in frustration*. And a result could finally be imminent.

(* Well we would’ve. A year later, by the way, that 10,000 BTC was worth about US$35,000. More than 11 years later it would’ve amounted to about US$690 million at Bitcoin’s peak. Ah well, there’s no such thing as a bad pizza purchase, right? Yeah, maybe not.)

Pizza always makes us digress. Back to the SEC vs Ripple. The case, brought about by the US Securities and Exchange Commission, which alleges Ripple Labs (creators of the XRP token) violated US securities laws, looks like it might be about to reach some sort of resolution.

It’s seen as a hugely important case – not just for XRP holders, but for the future of cryptocurrencies in the US more broadly.

There have certainly been high hopes among the XRP community for a favourable outcome. XRP’s token price ran up quite nicely over the weekend – from about US$0.32 to almost $0.40 – only to tumble down again today along with the rest of the extremely fearful market heading into another week of Fed-induced volatility.

According to reports, over the weekend (in separate motions filed on September 17) both Ripple and the SEC have called for a “summary judgment” in the US District Court Southern District of New York.

Even though these have been filed some two years after the SEC sued Ripple, this is still seen as an ahead-of-schedule development. It means we could at long last see a verdict handed down within a month – the next scheduled court date for this case is October 18.

With both parties issuing summary judgments, however, it would seem to indicate both are confident of victory. These filings are submitted when a party believes the other has no chance of successfully prosecuting or defending a claim.

A Ripple win could ‘hamstring the SEC’ in everything it does

If the SEC wins the case, XRP will be considered a security rather than a currency. It would be a security the SEC deems to have been sold unlicensed and therefore illegally. An SEC win would surely see the XRP price absolutely tank and would create a heavily armed precedent for the regulator (led by Gary “Come In and Talk to Us” Gensler) to go after just about every other blockchain project (e.g. Ethereum).

An XRP win, conversely, would be seen as a huge win for crypto, and might even spark an unlikely XRP-led crypto market revival (in the very best, very-hopium-filled scenario) in the midst of an ongoing bear market.

Following the filings, Ripple CEO Brad Garlinghouse remarked on Twitter: “Today’s filings make it clear the SEC isn’t interested in applying the law. They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress.”

Stuart Alderoty is a defence lawyer representing Ripple in the case. He noted that “after two years of litigation” the SEC is “unable to identify any contract for investment” and “cannot satisfy a single prong of the Supreme Court Howey test.”

The Howey test is a several-decades-old means of determining what qualifies as an investment contract and therefore what is subject to securities laws.

According to US attorney Jeremy Hogan, who summarises the latest events from the case neatly in a new video, “if Ripple wins, [its] argument is so broad that it could hamstring the SEC in everything it does from this day forward.”

In its filing, Ripple claimed that the SEC’s case “boils down to an impermissibly open-ended assertion of jurisdiction over any transfer of an asset”.

The motion also claims the SEC can’t establish that XRP token holders could not “reasonably expect profits” based on Ripple’s actions, as there were no contract obligations between Ripple and XRP token holders.

The SEC’s filing, meanwhile, puts forth that there can be an “investment contract” without a contract, or for that matter any rights granted to token buyers, and without any obligations to the issuer.

So, who’s likely to win? Obviously it’s difficult to say sitting here in “the bleachers”, but with XRP rising over the weekend (never mind the sink back down today) based on the summary filing development, it seems market sentiment is leaning towards Ripple.