Unfair delay can be a persuasive argument, Linda Jeng, an adjunct professor at Georgetown Law and former SEC lawyer, said in an interview.
“As a former regulator, I am disappointed to see the SEC wait so many years after the introduction of a product to launch an enforcement action,” said Jeng, who is also global head of policy at fintech startup Transparent.
Regulators should always apply their power thoughtfully and proportionally, and it should be predictable, Jeng said. When the agency waits this long to pursue an action, it makes them look arbitrary and chips away at their credibility, she said.
Hinkes also found Ripple’s arguments to be “very sympathetic” and said the agency’s delay and different classification of other coins undermines the government’s position that Ripple executives should have known XRP had to be registered as a security and recklessly disregarded the obligation.
Still, he cautioned that doesn’t mean the agency lacks authority to bring the case. The SEC has broad enforcement discretion, and it appears to be filed within the statute of limitations, Hinkes said.