Ripple Faces Difficult Choice After Settlement Route Is Blocked

Litigation attorney Andrew Balthazor, who co-leads Holland & Knight's Crypto Asset Dispute Team, was quoted extensively in a Bloomberg Law article reviewing the options for the U.S. Securities and Exchange Commission (SEC) and Ripple Labs Inc. after a federal judge once again blocked their attempt the settle an enforcement case involving the crypto company. Last week, Judge Analisa Torres refused the parties' second request to lift an injunction against Ripple preventing it from selling its XRP token as well as reduce a $125 million civil penalty. This development means Ripple and the SEC can either drop the appeal or continue with litigation, neither of which presents a compelling path, according to Mr. Balthazor.

"Dropping the appeals would leave the injunction and the penalty in place, so Ripple would have to deal with those consequences," he explained. "Pursuing the appeal potentially puts Ripple at risk of creating binding precedent across the Second Circuit on a legal ruling that Ripple and probably other members of the crypto industry would view as unfavorable."

Mr. Balthazor added that waiting for congressional action when it comes to the intersection of securities law and digital tokens is "a little bit of a Hail Mary," considering the proposed Market Structure Reform Act that would help resolve the dispute remains in the early stages of drafting and lacks the broader support enjoyed by other bills addressing specific types of crypto assets.

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