In the ongoing XRP lawsuit between Ripple and the US Securities and Exchange Commission (SEC), Ripple has submitted its response to the SEC’s request for penalties totaling almost $2 billion and entry of final judgment. Instead, Ripple proposes a fine of up to $10 million as a reasonable alternative. Filed on Monday, Ripple’s 186-page opposition document outlines their disagreement with the SEC’s harsh requirements following a court decision that ruled Ripple had illegally sold XRP to institutional investors without proper registration.
Ripple Vs. SEC: $10 Million Or $2 Billion?
Ripple initially accepts the court’s judgment, confirming their recognition and announcing adjustments to ensure compliance. The statement reads, “Ripple publicly acknowledges this ruling once more. We have altered our XRP sales methods and restructured our contracts to address the concerns raised by the Court.” By acknowledging the violation and demonstrating efforts towards rectification, Ripple aims to prevent additional penalties like an injunction.
The company firmly disagrees with the SEC’s proposed ban, insisting they have already made major improvements to prevent any future infringements. A crucial part of their argument states, “The SEC has not provided sufficient evidence that violations will occur again.” This stance is based on Ripple’s initiative to address past issues head-on through extensive corrective actions.
In response to the SEC’s call for disgorgement, Ripple argues that this demand is unwarranted since the SEC has not proven that Ripple’s actions led to any financial harm suffered by investors. Essentially, Ripple insists that according to case law, no disgorgement is justified if the SEC cannot demonstrate pecuniary damage. This argument is pivotal in Ripple’s defense as it highlights the absence of direct financial injury inflicted upon investors due to their actions.
According to Ripple’s argument, the proposed civil penalties are excessively high. They argue for a penalty significantly lower than what the SEC has requested, pointing out the discrepancy between this case and others with similar violations. The document proposes a maximum civil penalty of $10 million, which they believe is more in line with past precedents and the severity of the infringements.
In their defense, Ripple relies heavily on previous court rulings as a reference point. One of these precedents, Arthur Lipper Corp. v. SEC, is particularly relevant to their case. This decision is referenced to challenge the requirement for an injunction. According to this precedent, an injunction aims to prevent potential harm from recurring in the future and necessitates proof of a substantial likelihood that past misconduct will be repeated. However, Ripple argues that such evidence is not available due to their corrective actions taken thus far.
Reactions From The XRP Lawyer Community
The response from the legal community supportive of XRP reflects confidence in the solidity of the presented arguments. Bill Morgan, a well-known lawyer advocating for Ripple, expressed his conviction regarding Ripple’s stance against disgorgement: “To put it simply, I believe this argument is sound and disgorgement should not result in financial gain for investors. Based on current circumstances, Ripple appears to be in a favorable position for the judge to follow the Govil case and rule against disgorgement.”
In addition, Jeremy Hogan expressed through X that the SEC faces significant legal challenges in securing a victory against Ripple, and I continue to believe they missed their chance to take a commanding lead with their initial filing.
James “MetaLawMan” Murphy shared his perspective on the upcoming judge’s decision. He noted that Judge Torres hasn’t specified a particular timeline for rendering her verdict. However, based on past experiences with similar cases, Murphy estimated that the decision could be handed down within 60 to 90 days following the submission of the final brief (May 6).
At press time, XRP traded at $0.54921, up 2.5% in the last 24 hours.
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2024-04-23 09:11