Ripple SEC Settlement: XRP Lawyer Spotlights Major Obstacle If Agency Accepts Deal

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As a seasoned financial analyst with extensive experience in the crypto industry and securities law, I have closely followed the Ripple SEC lawsuit with great interest. The ongoing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has sparked intense debate within the XRP community regarding the potential implications of a settlement for the company’s future operations.

In the ongoing dispute between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), some XRP supporters have referred to a potential resolution as a “showdown.” This term has provoked strong reactions from pro-XRP attorney Bill Morgan, who voiced his opposition and emphasized that such a settlement could pose a significant challenge for Ripple.

Ripple SEC Settlement To Impact Crypto Firm’s Future Operations

Morgan abandoned the idea of a dramatic resolution in the XRP lawsuit settlement. Furthermore, he cast doubt on the imminence of a settlement, going against Brad Garlinghouse’s recent statements. In his post on X, the lawyer expressed that such an outcome would be a compromise rather than a significant victory for either party, implying that both sides would make concessions.

Morgan’s position underscores the intricacies and misunderstandings concerning the possible settlement of the high-profile dispute. The Securities and Exchange Commission (SEC) filed a lawsuit against Ripple in December 2020, accusing the company of raising over $1.3 billion by selling its XRP token without proper registration.

At the initial assessment, the Securities and Exchange Commission (SEC) categorized the token as an unregistered security. However, a 2024 court decision presided over by Judge Analisa Torres brought clarification to this classification. The judge determined that specific “programmatic sales” of XRP did not involve securities transactions.

A user has raised objections to the proposed settlement between Ripple and the Securities and Exchange Commission (SEC), expressing the view that “settlement without substantial concessions from the SEC is not worth it.” They further stated, “I don’t see the value in Ripple reaching a resolution unless the SEC provides an ironclad assurance that no further legal action will be taken after Judge Torres’ final decision.”

Morgan explained that settlements typically resolve ongoing disputes and any potential appeals related to the current case. Yet, the attorney pointed out an additional challenge Ripple could encounter post-settlement.

As a researcher delving into the intricacies of the securities industry, I’ve come across an intriguing observation from Morgan: “The primary challenge seems to be linked to Ripple’s XRP sales since late 2020 and potential future sales.” Similar sentiments were expressed by former SEC lawyer Marc Fagel, who shared Morgan’s concerns and added that the Securities and Exchange Commission’s financial requirements played a role in the ongoing debate.

Ex-SEC Weighs In On Settlement & Penalty

Fagel pointed out that a settlement between the parties would prevent either side from filing an appeal, which may be why a settlement hasn’t been reached. He also clarified that the Securities and Exchange Commission (SEC) is unlikely to receive the significant penalty of $1 billion, along with around $1 billion in disgorgement and interest, that they have demanded during the court proceedings. The amounts requested by the SEC remain unchanged, but they are not expected to receive this sum.

Additionally, Fagel clarified the misconceptions surrounding the Ripple SEC settlement during the private session on July 25th. He explained, “I’ve made an effort to educate people about the nature and function of closed meetings. A potential settlement (if it existed) wouldn’t be scheduled for such a gathering as I was the only attendee in the past who had that experience.” Some recipients showed understanding; others were more interested in sensational headlines.

What Makes The Situation More Complex?

Previously, Ripple’s Chief Legal Officer Stuart Alderoty referred to the court ruling in the Aron Govil case. He highlighted that if a purchaser doesn’t experience any monetary damage, the Securities and Exchange Commission (SEC) cannot claim disgorgement from the vendor. Moreover, Morgan noted that this judgment might impact the Ripple vs. SEC legal dispute.

If institutional investors didn’t sustain any financial losses as a result of their involvement with Ripple, the Second Circuit Court of Appeals choosing not to reconsider the Govil case is beneficial for Ripple. In March 2024, the SEC had previously claimed that these institutions suffered approximately $480 million in damages due to alleged discriminatory practices during Ripple’s XRP On-Demand Liquidity (ODL) sales.

The argument made by the agency is that if Ripple had registered the sales of XRP as securities, they would have been required to disclose discounts given to preferred institutional investors. This means that in the event of a settlement between Ripple and the SEC, the agency could potentially restrict future XRP sales using this point. Furthermore, Ripple is considering an IPO in the US, but the regulatory uncertainties are making the process more complicated.

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2024-07-26 13:12