Magistrate Judge Sarah Netburn, who is currently handling the Ripple vs SEC case in the Southern District of New York, has been proposed for the position of District Judge. Her appointment could benefit Ripple Labs as she has shown a favorable attitude towards cryptocurrencies and has made impartial decisions in this case.
At present, Judge Sarah Netburn has not made a determination regarding Ripple’s objection to the SEC’s excessive civil penalty. The digital payments company, through an opposition filing, proposed a $10 million damages payment instead. Furthermore, Ripple presented several counterarguments that challenge the SEC’s allegations.
Will Ripple Benefit From Judge Netburn’s Appointment?
This week, Ripple refused the SEC’s demand for $876 million in disgorgement and an additional $198 million in prejudgment interest. In contrast, Ripple is prepared to pay a maximum fine of $10 million while disputing the SEC’s proposed penalties. On April 22nd, Ripple submitted a filing challenging the SEC’s reasons for the fines. Nevertheless, they consented to pay civil penalties once the court determined that Ripple had violated Section 5 of the Securities Act of 1933 by offering XRP through institutional investment contracts.
Ripple raised three key points in response to the SEC’s arguments. Initially, the SEC had not provided sufficient evidence that Ripple’s institutional sales were likely to result in future violations of securities laws. Secondly, based on the precedent set in the Govil case, the SEC cannot demand disgorgement because they cannot prove that Ripple gained financially from any wrongdoing, and legitimate business expenses should be subtracted from any amounts owed.
Furthermore, the company argued that the civil penalty should not be more than $10 million, presenting weak justifications based on penalties in previous SEC digital asset cases. Simultaneously, Ripple disclosed modifications in its XRP sales procedures to the court. These alterations involve acquiring licenses for international sales and amending contracts to address raised concerns.
The Securities and Exchange Commission (SEC) will likely file its sealed reply brief by May 6. During this period, both parties and external entities have until May 20 to submit letters outlining their positions on sealing certain filing details.
The points made by Ripple hold water and it’s likely that Judge Sarah Netburn will rule in their favor. If she makes this decision prior to being appointed as District Judge, the SEC could face a significant defeat. Should the SEC choose to appeal, it’s extremely unlikely that Judge Netburn would change her mind.
Coinbase CLO Hails Judge Netburn
Paul Grewal, the legal chief at Coinbase, congratulated Magistrate Judge Sarah Netburn on her recent nomination to become a US District Judge for the Southern District of New York. He made this announcement in a post on X.
Furthermore, the judge overseeing the Ripple case shared her efforts in the field of crypto and law. The Chief Legal Officer of Coinbase commented, “She’s given a brilliant demonstration of why skilled judges are indispensable for ensuring fairness in the legal system related to crypto.”
Additionally, Bill Morgan, an advocate for XRP, commended her nomination. He expressed that her impartial judgments in the Ripple versus SEC case were noteworthy, stating, “Her handling of the SEC v Ripple case and dealing with a challenging adversary like the SEC demonstrates the merit of her appointment.”
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2024-04-25 10:22