A new theory has surfaced regarding why the U.S. Securities and Exchange Commission (SEC) has not dismissed its lawsuit against Ripple, despite closing cases against other crypto firms. Market analyst Vincent Van Code suggested that Ripple might be negotiating to overturn a court injunction that restricts certain XRP sales.

In a recent post on X, Van Code stated that Ripple is likely engaging with the Second Circuit Court of Appeals to challenge a key decision from July 2023. In that ruling, Judge Analisa Torres determined that Ripple’s direct sales of XRP to institutional investors qualified as securities transactions. Van Code speculated that Ripple wants this ruling reversed to facilitate its XRP sales to banks and payment processors without regulatory hurdles.

Could Ripple’s XRP Escrow Be Involved?

Van Code also suggested that Ripple’s large escrow holdings, totaling 37.1 billion XRP, could play a role in the ongoing legal situation. According to him, Ripple might be positioning these holdings as an asset for the US government’s strategic crypto reserve.

There has been speculation that the government could obtain XRP from Ripple’s escrow. Over the weekend, President Donald Trump confirmed that XRP would be part of the country’s digital asset reserve. Some believe this could mean a government acquisition of XRP through Ripple’s escrow. However, for this to happen, Ripple would need to lift the court injunction on its institutional XRP sales.

Additionally, Ripple was fined $125 million on August 7, 2024. Van Code suggested that the company could potentially settle this fine by transferring XRP to the government, though there is no official confirmation of such discussions.

SEC Has Dropped Other Crypto Lawsuits

Despite fighting Ripple the SEC has ended other crypto-related cases during recent months. In February 2024 the agency decided to cancel its lawsuit against Kraken since it had started it in November 2023. The agency has abandoned legal actions against Coinbase and Consensys after launching these proceedings recently.

These dismissals have raised questions about why the Ripple lawsuit remains active. Some legal experts believe the case’s complexity plays a role, as it involves multiple legal interpretations and ongoing appellate proceedings. Others, including attorney Jeremy Hogan, have pointed to the injunction on Ripple’s XRP sales as a key issue.

Next Steps in the Legal Process

The SEC legal battle against Ripple has reached its review stage at the Second Circuit Court. On January 15, 2025, the SEC presented its initial legal presentation to the court while Ripple must reply by April 16.

Van Code’s theory indicates that legal talks continue to change the trial outcome yet Ripple and the SEC have not publicly stated any changes. Market observers and lawyers follow legal updates because they want to know what will happen to Ripple’s operations next.

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