As a seasoned researcher with over two decades of experience in financial markets and securities law, I find myself intrigued by this ongoing saga between Ripple Labs and the Securities and Exchange Commission (SEC). The recent ruling by Judge Analisa Torres is indeed significant, as it represents a substantial reduction in the fine initially sought by the SEC.
On Wednesday, Judge Analisa Torres decided that Ripple Labs owes a $125 million fine for civil offenses, which is significantly less than the $2 billion demanded by the Securities and Exchange Commission (SEC) regarding questionable XRP token sales. According to Bitcoinist, this ruling marks the end of the district court proceedings. However, if either party chooses to appeal, higher courts might continue to handle the case.
Pro-XRP Lawyers Disagree On Ripple Appeal
Brad Garlinghouse, CEO of Ripple, expressed a favorable response to the ruling, emphasizing the significant disparity between the SEC’s original request and the ultimately imposed penalty. Through X, he said, “The SEC sought $2B, but the Court reduced their demand by approximately 94%, acknowledging that they had excessively overstepped. We acknowledge the Court’s decision and now have a clear path to expand our business. This is a triumph for Ripple, the industry, and legal precedent.”
Stuart Alderoty, Ripple’s Chief Legal Officer (CLO), shares a similar perspective. He also mentioned that his firm is content with the verdict. The court dismissed the SEC’s claim that Ripple acted irresponsibly and reminded the SEC that this case didn’t involve accusations of fraud or intentional misconduct, with no one experiencing financial loss. […] We acknowledge the $125M fine for certain past sales to knowledgeable third parties as imposed by the court.
Fred Rispoli, a member of the pro-XRP community and attorney, interprets Ripple’s official responses as suggesting that the company will not seek an appeal in the ongoing court case. In simpler terms, he believes that previous actions deemed illegal by the court will have no bearing on their current business operations, which he says are unaffected by the injunction.
Lawyer Jeremy Hogan, who supports Ripple, explained why they might be content with the court’s decision without appealing it further. He highlighted several aspects that lessen the impact of the injunction on Ripple’s business operations, specifically in regards to international transactions and exemptions from regulations that can be applied to domestic sales.
According to Hogan, Ripple can indeed sell XRP to institutions, but only if it’s done under an exemption from registration. Moreover, he emphasized that Ripple can utilize its On-Demand Liquidity (ODL) product, but they need to exercise caution in how they go about it.
While not everyone concurs, lawyer James “MetaLawMan” Murphy expressed his thoughts on Judge Torres’ ruling in the Ripple case through X: “The court has decided on remedies for Ripple. No disgorgement due to no proven losses by the SEC. A $125 million civil penalty for securities violations in institutional sales. An injunction preventing further Section 5 of the Securities Act violations. This is significantly lower than the damages the SEC initially sought. I anticipate that both parties will file appeals.” Similarly, pro-XRP lawyer Bill Morgan agrees and believes that both sides are likely to appeal.
Will The SEC Appeal?
As a crypto investor, I’m currently in limbo because the SEC hasn’t responded formally to the recent ruling yet. This lack of communication from the agency has ignited speculation about their possible future strategies. Interestingly, Tony Edward, host of Thinking Crypto podcast, posits some intriguing theories regarding the broader implications for SEC Chair Gary Gensler. He suggests that political and narrative pressures could potentially influence the decision to appeal, given the current climate.
In Edward’s comment via X, he points out that while some people speculate Gary Gensler may appeal the SEC vs Ripple ruling, the broader context is being overlooked: Gensler has lost public trust due to his questionable actions and allegiance to Elizabeth Warren’s political agenda. His untruths are being exposed, leading to losses in court cases. Moreover, he faces significant political pressure, with criticism from Donald Trump, growing dissatisfaction among Democrats, and further issues yet to be revealed.
Remarkably, in June, Kristina Littman, who once led the SEC’s Enforcement’s Cyber Unit, suggested that the SEC might opt to uphold the district court’s verdict instead of facing an uncertain outcome in a higher court, as reported by Bitcoinist. Littman expressed this view during a digital assets conference, stating, “I believe there’s some speculation that the SEC might decide to leave the Ripple ruling as a district court decision and avoid taking it to a higher appellate level, where they could potentially create undesirable legal precedents.”
In simple terms, both sides have 60 days after the court’s verdict to submit an appeal. However, it’s unclear what steps the Securities and Exchange Commission (SEC) will take next, given ongoing talks within the Democratic Party about redefining regulations for the crypto industry. Moreover, the deadline for filing an appeal is in early October, which coincides with the US elections, making things even more complicated.
At press time, XRP traded at $0.6038.
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2024-08-08 20:12