**John Reed Stark Hints at Possible Dismissal of Ripple Lawsuit**
Former SEC official John Reed Stark has indicated that the Ripple lawsuit might be on the verge of dismissal. Stark recently discussed the SEC’s remarkable shift away from its previously aggressive enforcement approach towards the crypto industry. He pointed out that the former SEC leadership had initiated multiple enforcement actions against crypto firms, categorizing several digital assets as securities. Notably, recent SEC decisions show a retreat, as the agency has dropped some appeals and enforcement actions. For instance, it has withdrawn its lawsuit against Coinbase, paused the Binance lawsuit, and ceased investigations into Uniswap and OpenSea.
The SEC has also stepped back from its enforcement posture by dropping two appeals concerning the classification of crypto businesses as securities dealers. These cases were brought forth by various crypto associations, including the Crypto Freedom Alliance of Texas and the Blockchain Association. Despite a federal court ruling that the SEC’s broadened definition of ‘dealer’ exceeded its legal authority, the commission appealed the decision on January 17, just days before Gary Gensler’s resignation. However, under the leadership of acting chair Mark Uyeda, the SEC has recently dismissed the appeal with a brief notice. An SEC spokesperson indicated that the commission has chosen to accept the federal court’s ruling, noting that pursuing the appeal could negatively impact liquidity in the Treasury market, potentially increasing its volatility.
**SEC Freezes Five Crypto Litigation Actions**
Following this decision, Stark noted that the SEC has frozen five crypto-related enforcement actions in just a few days, marking a new record for the commission. “Since acting SEC Chair Mark Uyeda took the helm, the SEC has now filed five crypto-litigation ‘Pauses,’” Stark commented. He further suggested that the SEC intends to hold off on all crypto-related litigations until its internal crypto task force, led by Commissioner Hester Peirce, completes its evaluation. This task force is expected to develop a regulatory framework for the crypto sector.
**Ripple Case May Be Next for Dismissal**
In light of the SEC’s recent dismissals of crypto-related litigation, Stark proposed that the Ripple lawsuit could be the next to be dismissed. He explained that the SEC has made it clear that it will not pursue any case claiming that a digital asset is a security until the crypto task force finishes its assessment. As of now, the SEC has not publicly disclosed whether it will drop the Ripple appeal in the near future. However, several experts, including Attorney Jeremy Hogan and Cherry Empress, have pointed out that the Ripple case is complex, especially since the parties involved already have a court order. For context, while the court determined that Ripple’s programmatic sales and other distributions of XRP were not securities, it did impose a $125 million fine on the company for violating the law through its sales.
