Ripple With the End of a Long Wait, What is at the End?

Ripple's lawsuit with the U.S. Securities and Exchange Commission (SEC) is about to end the long fight as it moves to a summary ruling.

When the lawsuit between Ripple and SEC is finally about to end, the circumstances in favor of Ripple were exposed to the public through the media, and Ripple(XRP) showed a "rise" of more than 30% in a week. Ripple, who had been on the rise for a while but had quickly dropped, showed a unusual pace and began to create expectations, saying, "Is it time for real Ripple now?"

At a time when Ripple's lawsuit with the SEC was about to end, many investors began to wonder about Ripple's future with expectations of winning of a lawsuit again SEC.

What is the future of Ripple following the lawsuit?

To find out what is circleness, it is necessary to first grasp the nature and meaning of the event. What was the meaning of the lawsuit between Ripple and SEC?

# SEC Looks Over the Entire Cryptocurrency Market Through Ripple

What the SEC aimed at as a target would not have been simply a ripple in violation of the securities law. A company that is clearly classified as a U.S. corporation, and cryptocurrency, which remained firmly in third place in market capitalization until December 2020. If such ripple is punished for violating the Securities Act, SEC will have a clear justification to supervise the majority of cryptocurrency corporations. For SEC, the meaning of Ripple was the supervisory authority itself for the entire cryptocurrency market. The SEC's plan seemed to be succeeding, with Ripple being kicked out of most U.S. exchanges due to the lawsuit that began.

But things have changed a lot during the two-year litigation period. Ripple, a 'one' single cryptocurrency company, persistently engaged in a battle with SEC and did not surrender. Unlike the plan that the SEC expected, Ripple resisted fiercely over two years, shouting 'Final Battle', and in the meantime, the landscape of U.S. politics surrounding cryptocurrency has changed very much.

Many critics of U.S. politics on SEC, which had stubbornly demanded regulatory rights for the entire cryptocurrency market, have gathered, creating a very unfavorable situation for SEC.

# Things that Don't Match Expectations

At October 2021, Republican Representative Patrick McHenry sent the official letter including six questions about cryptocurrency regulation to SEC Chairman Gary Gensler and demanded an answer. The questions described in the questionnaire were simple. It was whether it was possible to explain the clear basis for defining and cracking down on cryptocurrency as securities and the reason for a clear regulatory crackdown to the public. Both questions and answers were issues that would have a decisive impact on the ripple lawsuit. Gensler continued to pretend not to know, responding with silence.

In 2022, under President Biden's executive order to draw up a regulation plan for integrating cryptocurrency in the U.S., the U.S. legislature busily searched for a dedicated regulatory agency with a clear bill to regulate the cryptocurrency market. Here, the U.S. political community has moved to select the U.S. Commodity Trade Commission (CFTC) as a regulatory agency dedicated to cryptocurrency. At June, Cynthia Loomis and Kirsten Gillibrand proposed the Responsible Financial Innovation Act as a draft of the U.S. cryptocurrency integration regulation, which gave CFTC great weight to the jurisdiction of cryptocurrency regulation. Currently, the U.S. legislature is gradually completing regulations on the integration of the U.S. cryptocurrency market based on the Responsible Financial Innovation Act, and as a result, CFTC is virtually becoming a regulatory agency dedicated to the cryptocurrency market in the cryptocurrency market.

Crucially, the news that Caroline Farm, a standing member of the CFTC, visited Ripple was announced at 20. September, raising an analysis that Ripple's jurisdiction may have been transferred to the CFTC.

As a result, the SEC's plan to claim jurisdiction over the entire cryptocurrency market after classfying Ripple as a security seems to be coming to naught.

# Ripple-SEC, What They Really Want

From this point of view, the real intention of SEC, which continues its fierce 'fight' with Ripple, can be seen as a recovery of its pride. It is a victory over the jurisdiction competition with CFTC by acquiring supervisory authority over the entire cryptocurrency market through winning of the lawsuit.

On the other hand, in the case of Ripple, the lawsuit began and lost the U.S. market, the largest capital gathering place. However, as a result of continuing aggressive business around the world except for the U.S. to establish a 'new global payment system' or 'SWIFT 2.0' through its own efficient payment network 'ODL', it succeeded in distributing ODL worldwide even during the lawsuit. Taking advantage of the characteristics of being optimized for interbank transactions, it succeeded in distributing large-scale to banks around the world, resulting in an increase in ODL transactions by about 800% during the year. In addition, at the time of the global CBDC development boom, it was nominated for a strong CBDC distribution network by a number of central banks through marketing that it was optimized for CBDC application.

What can be inferred from Ripple's move is that the purpose of Ripple was not the rise of cryptocurrency Ripple(XRP) through favorable factors, but the global spread of ODL.

Eventually, the essence of the lawsuit was that they were not 'real targets' for each other. While Ripple has the intention that it cannot easily lose the world's largest capital gathering place SEC has the intention to secure regulatory oversight of the cryptocurrency market.

# It's Time to Say Goodbye. See You Next Time

For both sides, the lawsuit has become a long mud fight and a major pride fight. However, considering the gains and losses of both sides according to the outcome of the litigation trial, the damage to the SEC may be even more severe. In addition to the disgrace that regulators have been defeated by a single cryptocurrency company, all the moments when they resorted to litigation by losing control of the U.S. cryptocurrency market to CFTC can come to nothing at one moment.

On the other hand, in the case of Ripple, it has already continued its business development focusing on the global distribution of Ripple Networks, showing that it does not seem to care much about Ripple sales in the U.S. market. For example, Brad Gallinghouse, CEO of Ripple, said, "95% of Ripple customers are non-U.S.companies, and record growth is achieved overseas," adding, "We are hiring more and more employees outside the U.S. and the Ripple business will be hardly affected even if SEC wins the lawsuit." There was also news that Ripple was trying to relocate its headquarters to Canada.

Depending on the difference in position between the two sides, if Ripple wins the case, it is speculated that the SEC's appeal is expected to continue.

The time when the end of lawsuit seems to be near has come for ripple holders, who have waited a long time relying on the 'myth' vision left by Ripple. The story of "the patient wins in the end" eventually became a myth. It remains to be seen whether Ripple will be able to create a myth of the establishment of a new financial system, just like their mythical vision.

권승원 기자 ksw@