The ongoing XRP lawsuit between Ripple and the SEC has reached another critical point. U.S. District Judge Analisa Torres of the Southern District of New York rejected the joint motion for a ruling and settlement submitted by both parties. Hopes for a swift resolution have been temporarily delayed. 

Ripple and the SEC had requested the $125 million penalty be reduced to $50 million and certain obligations to be lifted. However, the court found that this motion was not properly filed. 

Court Speaks Clearly: Procedural Errors Determine the Outcome 

Judge Torres referred to Federal Rule of Civil Procedure 60(b). The parties failed to consider this rule in their submissions. This rule only allows exceptions under extraordinary circumstances. Therefore, the court stated it could not review the motion. Additionally, presenting the requests as a settlement did not simplify the process. The court emphasized its duty to consider the public interest. The parties’ expectations were not met. 

Defense attorney James Filan explained on social media that the decision was based on procedure. According to him, the requests were not rejected but were dismissed due to incorrect filing. Meanwhile, legal expert Fred Rispoli warned about the process ahead. He said Ripple and the SEC would refile their motion properly. However, this time, the court must be convincingly persuaded of the public interest. 

XRP Price Drops 

Following the decision, XRP experienced a sharp decline. Losing over 4%, XRP fell to around $2.45. Naturally, this caused anxiety among investors. The prolonged lawsuit has reduced short-term market confidence. Ripple’s Chief Legal Officer, Stuart Alderoty, stated that the ruling does not affect the determination that XRP is not a security. He also emphasized that both parties agreed on the settlement and will revisit the court process. 

Legal analysts MetaLawMan and Bill Morgan also issued warnings. Both believe it has become more difficult for judges to overturn previous rulings. This means the case will become more complicated for Ripple and the SEC. 

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“Soon after this appeal was filed, the parties reached a settlement of this case,” the court filing stated. “It is expected that all these tasks can be done within 45 days.”

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The terms of the settlement have not been made public.

From Market Rivals to Courtroom Adversaries

Osprey accused Grayscale of misleading advertising by promoting its Grayscale Bitcoin Trust (GBTC) as if conversion to a spot ETF was guaranteed, despite regulatory uncertainty at the time.

“Grayscale’s messaging misled the market,” Osprey had claimed in its original lawsuit.

However, in January 2024, the SEC officially approved GBTC’s conversion into a spot ETF, and the product began trading on NYSE Arca.

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Details of the Lawsuit

The SEC alleges that Nova Labs sold unregistered investment products, including electronic devices called “Hotspots”, which mine the company’s cryptocurrency Helium (HNT), and a program called Discovery Mapping, which allows users to trade their private data for crypto assets.

The SEC also accused Nova Labs of misleading potential investors by claiming that major companies such as Lime, Nestlé, and Salesforce were using or relying on its wireless network, allegations the SEC states are untrue.

“Unregistered Securities” in the Crypto World

The term “unregistered securities” is well-known in the crypto world, with several similar lawsuits brought during Gary Gensler’s tenure at the SEC.

However, a significant win for the industry came in July 2023 when the court ruled that XRP’s programmatic sales on digital asset exchanges did not qualify as unregistered securities. Despite this, the SEC quickly filed an appeal to contest the decision.

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SEC’s Future Under New Leadership

With new leadership set to take over at the SEC on January 20, the agency may reportedly reconsider some existing crypto enforcement cases.

According to a January 15 Reuters report, the SEC may review and potentially drop certain cases in the days following the transition.

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The company announced on December 19 that it had purchased 990 Bitcoin (BTC) at an average price of $101,710, aligning with its strategy of combining low-cost Bitcoin production with opportunistic market purchases to establish BTC as a reserve asset.

Hut 8‘s expansion of its BTC reserves highlights the increasing interest from institutional investors in Bitcoin as a strategic asset in financial portfolios. This trend gains momentum as the United States prepares for a more crypto-friendly administration under Donald Trump.

With this purchase, Hut 8 has brought its total BTC reserves to 10,096 BTC, with an average acquisition cost of $24,484.

Strategic Reserve Management

Hut 8 CEO Asher Genoot stated that the company’s strategic BTC reserve is a vital component of its treasury strategy and aligns with its operational and capital objectives. Genoot explained, “As we scale operations and extend our cost advantage in Bitcoin production, we expect to grow these reserves organically at prices significantly below market rates.”

The company aims to raise a total of $500 million to purchase BTC as a strategic reserve asset, supported by a recent $250 million stock repurchase and sale program.

Hut 8 Class-Action Lawsuit

On December 2, the company filed a motion to dismiss a class-action lawsuit initiated by its shareholders. The lawsuit allegedly stems from a short-seller report by J Capital Research, which Hut 8 claims was part of a campaign to sink its stock for financial gain.

The lawsuit arose after J Capital Research accused Hut 8 of overstating the profitability of its acquisition of United States Bitcoin Corp. and concealing operational issues at a Texas facility. Hut 8 has denied these allegations.

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Court Ruling and Legal Process On December 11, the Supreme Court issued a brief order, rejecting Nvidia’s appeal without providing a reason. This decision upheld the Ninth Circuit’s ruling, which reversed a lower court decision from March 2021 that had initially dismissed the case.

Nvidia was aiming to overturn the Ninth Circuit Court of Appeals ruling from August 2023, which revived a lawsuit filed by Nvidia shareholders in 2018. The lawsuit claims that Nvidia hid over $1 billion in GPU sales to crypto miners and that CEO Jensen Huang downplayed the volume of these sales.

A spokesperson for Nvidia told:  “We would have preferred a decision affirming the trial court’s dismissal of the case, but we are fully prepared to continue our defense. Consistent and predictable standards in securities litigation are essential to protecting shareholders and ensuring a strong economy, and we remain committed to supporting them.”

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Shareholder Claims and Evidence The lawsuit argues that a significant portion of Nvidia’s GPU sales was driven by sales to crypto miners. It points to the decline in sales at the end of 2018, when the crypto market collapsed, causing Nvidia’s stock price to drop nearly 30% in just two days.

In October, the Department of Justice and the Securities and Exchange Commission (SEC) supported the case, stating that Nvidia’s argument was based on false information. The agencies highlighted the shareholders’ case, which includes evidence such as statements from former Nvidia executives and a Bank of Canada report alleging that Nvidia understated its cryptocurrency revenue by $1.35 billion.

Nvidia’s Previous SEC Payment In 2022, Nvidia paid $5.5 million to the SEC to settle charges related to its insufficient disclosure of the impact of crypto mining on its gaming business. The company neither admitted nor denied the SEC’s findings, but this payment raised concerns about Nvidia’s past transparency issues.

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