The civil trial of the US Securities and Exchange Commission’s (SEC) case against Ripple and its top executives, Brad Garlinghouse and Chris Larsen, is set to commence on April 23, 2024. However, the Founder of Dizer Capital, Yasin Mobarak, believes that the SEC will withdraw its charges against Garlinghouse and Larsen before then.
Why The SEC Will Drop Charges Against Ripple Founders
In a tweet shared on his X (formerly Twitter) platform, Mobarak stated that the reason for his prediction is that it is not in the SEC’s interest to have “a trial where their corruption can be exposed.” He further stated that the Commission’s “agenda” is bigger than these two executives.
It is not in their interest to have a trial where their corruption can be exposed, not to mention their agenda is far bigger than just these two executives. The longer $XRP solidifies the…
— Yassin Mobarak (@Dizer_YM) October 4, 2023
Garlinghouse and Larsen were joined as co-defendants when the SEC filed a lawsuit against Ripple in December 2020. The Commission alleged that the executives structured and promoted the XRP sales to finance the company’s business. Additionally, it accused both individuals of effecting “personal unregistered sales of XRP totaling approximately $600 million.”
Mobarak shares similar sentiments with pro-XRP legal expert Fred Rispoli, who stated that the SEC is unlikely to pursue a trial against them and outlined reasons for his assertion. One of the reasons he gave was that the SEC would not want a situation where its credibility is questioned, which he believes could happen if someone like the former SEC Director Bill Hinman was called to testify.
The SEC filing a motion for an interlocutory appeal was considered by many as a means to prolong the trial unnecessarily, which Judge Analisa Torres had reasoned in her order. Following the denial of this appeal, Mobarak believes that the SEC will now move to end this case quickly so it can appeal to the Court of Appeals and “continue to sustain this cloud of uncertainty on the whole industry.”
SEC Needs An Incentive To Do So
In response to Mobarak’s tweet, another X user mentioned that it would be surprising if the SEC decided to drop the charges against Ripple’s executives “without some incentive from Ripple given to them.” Such an incentive would likely relate to the crypto firm agreeing to a form of settlement.
This is something that Rispoli had suggested when he said that the SEC didn’t intend to maintain a suit against Garlinghouse and Larsen but simply wanted to pressure the company into a “weak settlement.”
However, it is unlikely that Ripple is willing to reach any form of settlement with the Commission as Ripple’s President Monica Lang asserted that her company intends to see the case “all the way through.”
Moreso, there is no reason why Ripple should be willing to settle, considering that they already scored two major victories against the SEC and seem to have the upper hand now.
Ripple and its executives will also have it at the back of their mind that the crypto community is looking to this case for clarity, as any judgment will likely set a precedent for how the crypto industry should be regulated.