Bill Morgan, a lawyer advocating for Ripple, has presented a strong case about Ripple’s On-Demand Liquidity (ODL) transactions not being investment contracts. This argument is significant as Ripple is currently engaged in a legal dispute with the US Securities and Exchange Commission (SEC) regarding the SEC’s classification of XRP.
Ripple Vs SEC: Why Are ODL Sales Not Investment Contracts?
Morgan recently expressed his viewpoint on X, saying, “For the past three years, I’ve made it clear that On-Demand Liquidity (ODL) contracts aren’t considered investments.” He emphasized Ripple’s position that ODL transactions are distinct from traditional investments because customers briefly hold XRP to execute cross-border payments. Moreover, Morgan stressed that the purpose of ODL is not for investment activities.
Furthermore, the lawyer noted that Ripple’s agreements clearly forbid customers from anticipating or making profits from buying XRP. This comment follows Ripple’s filing against the SEC’s request for penalties and final judgment entry. Although Ripple consents to a fine of up to $10 million, it disagrees with the SEC’s demand for a refund of $876,308,712 and interest of $198,150,940 prior to judgment.
According to Ripple’s argument, the Securities and Exchange Commission (SEC) has not provided sufficient evidence showing that institutional XRP sales are likely to break the law again or that they intentionally disregarded it. Additionally, Ripple brought up the case of Govil as a precedent, contesting the SEC’s demand for disgorgement. They believe that the SEC cannot prove financial damage caused and that reasonable business costs should be subtracted from any penalties imposed.
An additional testimony was given by Monica Long, President of Ripple Labs, in support of the blockchain company. She pointed out that all On-Demand Liquidity (ODL) clients of Ripple’s subsidiaries reside outside the US. As a result, Ripple itself does not have any ODL customers, making the SEC’s accusations against the company irrelevant.
CEO Brad Garlinghouse Lashes Out At SEC
Brad Garlinghouse, CEO of Ripple, expressed his confidence in filing their opposition on the very day that two SEC lawyers are reportedly stepping down due to their actions in the Debt Box case. Furthermore, Garlinghouse issued a cautionary note about the potentially harmful effects of the SEC’s contentious policies.
He stated, “The US will be picking up the pieces of the agency’s disastrous policies long after Gensler is gone.” Meanwhile, Ripple CLO Stuart Alderoty reaffirmed confidence in the Ripple vs SEC case. Moreover, expects Judge Torres to provide a fair ruling during the final remedies phase.
In a recent post on X, Alderoty expressed that Ripple’s opposition to the SEC’s demand for a $2B penalty for past institutional sales has been made public. In this case, where no wrongdoing or misconduct (allegations or findings) were proven, and where Ripple prevailed on key points, the SEC’s large penalty request is seen as another instance of the agency’s efforts to intimidate the crypto industry in the US.
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2024-04-23 12:23