Attorney Jeremy Hogan outlined potential developments in the ongoing legal battles between the U.S. Securities and Exchange Commission (SEC) and major cryptocurrency firms like Ripple and Coinbase last week. Sharing insights on social media platform X, Hogan referenced comments from former SEC enforcement chief John Reed Stark, suggesting the SEC may shift its approach to non-fraud crypto cases.
Hogan anticipates that SEC Chairman Gary Gensler may step down before Jan. 20, when President-elect Donald Trump will be inaugurated for his second term as president. Trump has promised to fire Gensler on his first day in office. Gensler’s resignation will allow a new leader to assume control of the SEC, Hogan noted, predicting:
The new head (or interim head) sends out marching orders that all non-fraud crypto cases need to be disposed of.
If new leadership follows this approach, Hogan expects the SEC’s litigation team to review each active case for possible resolution. He detailed: “The litigation team looks at each case and recommends to either settle or dismiss each, and brings their recommendations to the Commissioners who then vote yay or nay (there will now be 3 Rep appointed, so it will ‘yay’).”
The SEC has filed lawsuits against Ripple, Coinbase, and other crypto firms, alleging violations of securities laws. In December 2020, the SEC sued Ripple, arguing that XRP sales constituted unregistered securities offerings. Judge Analisa Torres issued a mixed ruling in July 2023, deciding that Ripple’s institutional XRP sales were securities, while programmatic sales on public exchanges were not. The SEC appealed this ruling, expressing concerns about the precedent it sets for other digital assets. In June 2023, the SEC also sued Coinbase, claiming it operates as an unregistered securities broker, intensifying regulatory debates.
He predicts that the Ripple case, specifically, would be settled for the awarded amount, saying:
The Ripple case, or any case with a ruling, will be ‘settled’ for the judgment amount — $125m. It would be … awkward to settle for less than what was already awarded by a court!
Hogan estimates that the entire process will take time but he remains firm in his forecast for how the Ripple and Coinbase cases will ultimately be resolved. “This will take some time. Not January, but perhaps before summer,” he opined.
SEC Chair Gary Gensler’s “regulation by enforcement” strategy has sparked both praise for enhancing investor protections and criticism for stifling innovation. Many in the crypto sector, including SEC Commissioner Hester Peirce, advocate for clearer guidelines tailored to digital assets rather than traditional securities laws.
