As a seasoned crypto investor with a knack for navigating the intricacies of regulatory battles, Wednesday’s news about Ripple’s $125 million penalty from the SEC didn’t exactly rattle my nerves. I’ve seen enough twists and turns in this space to know that every decision, no matter how decisive it seems, often opens up new possibilities.
On August 7th, Wednesday, the U.S. Securities and Exchange Commission (SEC) penalized Ripple with $125 million in their ongoing lawsuit regarding institutional sales of XRP, which allegedly violated securities laws. This decision has sparked debate about the legality of on-demand liquidity (ODL) transactions that employ XRP for swift cross-border payment settlements.
Ripple Can Continue ODL Sales to Institutions
As a researcher, I can share that attorney Jeremy Hogan expressed optimism about the future of Over-the-Counter (OTC) transactions using XRP, stating there should be no significant concerns in this area moving forward. He further clarified that most of Ripple’s ODL sales occur outside the United States and are thus not governed by the SEC’s ruling, providing a degree of regulatory clarity for these international transactions.
Lawyer Hogan highlighted that Ripple may persist in utilizing these ODL sales, but it should exercise caution in the process. Hogan emphasized five key exceptions that would prove more straightforward for the company when selling to business entities.
The lawyer stated that the judge failed to include the On-Demand Liquidity (ODL) terminology they requested. Essentially, this implies that if the Securities and Exchange Commission suspects the blockchain company has breached the court order, they can file for another contempt charge and present proof of this infraction. This would then enable the blockchain company to contest that there should be no exceptions when it comes to profit if the use of XRP is minimal during ODL transactions.
Beyond this, Hogan stated that Ripple’s legal team has had the summary judgment for more than a year. He suspects that the company may have adapted its XRP sales to maintain compliance. Nevertheless, whether Ripple has inadvertently crossed the line, as the judge implied, can only be decided if a contempt hearing takes place.
XRP lawyer Bill Morgan also apprecited the analysis from Attorney Hogan. He wrote:
“The challenge lies in accommodating ODL sales within exemptions or registering them, which can restrict the potential for low-cost global secondhand ODL transactions, as these sales aren’t classified as securities. The goal was to facilitate instant value transfer at minimal cost, given the internet’s ability to instantly transmit information. It seems puzzling why a national regulator would intervene in what technology enables on a global scale.”
XRP Gains 20%
Following the SEC’s announcement of a reduced penalty, the XRP community rejoiced since the imposed fine was significantly lower than the $2 billion suggested by the SEC. This news sent the XRP price soaring by an impressive 20%, surpassing the $0.60 mark. Now, market analysts are discussing the possibility of an XRP Exchange-Traded Fund (ETF) coming to fruition.
Wen XRP ETF?
— Nate Geraci (@NateGeraci) August 8, 2024
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2024-08-08 08:15