A market pundit has proposed a new theory for why the new SEC leadership has not yet dismissed the Ripple lawsuit despite it being the oldest crypto case on their desk.
Notably, the U.S. Securities and Exchange Commission’s (SEC) sustenance of the Ripple lawsuit has left many confused, especially as the new pro-crypto leadership terminates legal actions against other prominent firms.
As a result, several theories on the possible reason behind this decision have surfaced. In the most recent instance, market commentator Vincent Van Code shared an idea surrounding the injunction barring certain sales of XRP tokens by Ripple.
Ripple Looking to Lift Court Injunction?
Van Code suggested in an X post that Ripple is likely engaged in negotiations with the Second Circuit Court of Appeals to overturn a pivotal ruling from July 13, 2023. In that decision, U.S. District Judge Analisa Torres determined that Ripple’s direct sales of XRP to institutional investors constituted securities transactions.
Van Code believes Ripple seeks to reverse this finding to enable it to easily distribute XRP to participants in its RippleNet ecosystem, such as banks and payment processors, without regulatory encumbrances.
In addition, he speculates that Ripple may aim to position its XRP escrow holdings, currently worth 37.1 billion tokens, as a potential asset for a U.S. strategic reserve, also possibly settling its $125 million fine, imposed on Aug. 7, 2024, by transferring XRP to the government.
Recall that President Donald Trump confirmed over the weekend that XRP would secure a place in the U.S. crypto reserve. Some speculate that the government could procure its XRP tokens by taking over Ripple’s escrow.
According to Van Code, for Ripple to be able to sell the escrowed tokens to the government, it would need to overturn the Aug. 7 ruling imposing an injunction on parts of its institutional sales. This theory, while compelling, remains speculative absent concrete evidence.
SEC Dismisses Other Cases
Other SEC cases have not been so complex. For instance, last month, the SEC dismissed its lawsuit against Coinbase, which alleged the exchange operated illegally by offering unregistered securities.
Similarly, late last month, the agency abandoned its case against Consensys concerning its MetaMask staking services. The SEC also terminated its action against Kraken on Feb. 18, a case that began in November 2023, over alleged securities violations.
These rapid dismissals contrast with the Ripple lawsuit, which commenced on December 22, 2020, making it the oldest and most advanced of the agency’s crypto-related cases, now under review in the Second Circuit.
Notably, on Jan. 15, 2025, the SEC submitted its opening brief to the Second Circuit. Ripple has until April 16 to file its own brief. Van Code’s idea suggests that these appellate proceedings may involve negotiations to shift the legal outcome in Ripple’s favor.
There have also been other theories on the possible reason. Interestingly, attorney Jeremy Hogan pointed to the injunction placed on Ripple’s XRP sales. According to him, Ripple might be looking to lift this, a sentiment that aligns in part with Van Code’s theory.