The Securities and Exchange Commission (SEC) has submitted its brief responding to appeals in its ongoing legal battle with Ripple Labs, along with supporting documents. This filing marks a pivotal moment in the dispute since it is the final dissertation before Judge Torres issues her decision on the appeals.
SEC files final brief as decision day nears
Pro-XRP attorney Bill Morgan provided comprehensive analysis breakdown of the SEC’s final brief via X, highlighting the nuances of the legal arguments and the potential ramifications for Ripple and its operations. One of the main points of contention remains the question of the financial damage caused to institutional buyers of XRP.
The SEC argues that financial damages should include not only direct losses, but also missed opportunities for greater profits due to less favorable XRP purchase terms. Morgan noted: “The SEC’s response adds nothing new to the argument regarding financial harm. He added skepticism about the likelihood of restitution, saying: “I don’t think restitution will be ordered, but the outcome is not obvious.” »
Additionally, the SEC’s response makes a strong case for a permanent injunction that would limit future sales of XRP by Ripple, particularly to its On-Demand Liquidity (ODL) clients. According to Morgan, “The SEC argues that an injunction should be granted because Ripple’s business currently consists almost entirely of selling XRP to institutions.”
Additionally, the SEC claims that Ripple has abandoned several defenses it had previously asserted, such as the extraterritoriality of its sales to accredited investors, particularly with respect to institutional transactions. According to the SEC, this indicates a strategic withdrawal by Ripple in the face of unfavorable legal analysis and precedents.
In response to the SEC filing, Ripple Chief Legal Officer Stuart Alderoty expressed a strong dissent, criticizing the SEC for its approach: “More of the same from the SEC – failing to faithfully enforce the law and trying to deceive the judge. eyes.” He continued: “The good news is that we are closer than ever to putting this lawsuit behind us, although unfortunately many are only beginning the journey. We are confident that the Court will approach the reparations phase of fair manner.
Alderoty also made a pointed criticism of the SEC’s respect for international regulatory frameworks: “And just when you think the SEC can’t sink any lower, if you’re a financial regulator outside the United States and you’ve done the hard work to establish comprehensive crypto licenses. executives, know that the SEC has no respect for you and thinks you are handing out the equivalent of fishing licenses.
It’s more of the same from the SEC – failing to faithfully apply the law and trying to mislead the judge. The good news is that we are closer than ever to putting this trial behind us, although unfortunately many are just beginning the journey. We trust the Court… https://t.co/JGhxAtOuk1
–Stuart Alderoty (@s_alderoty) May 7, 2024
Financially, the stakes are high. The SEC is imposing fines and penalties that could total about $2 billion, underscoring the seriousness with which it views alleged regulatory violations. Ripple, to counter this, has propose a maximum fine of just $10 million, arguing that the SEC’s demands are disproportionate to sanctions imposed in similar cases.
Ripple says it has made significant changes to its institutional XRP sales practices to prevent future violations, signaling its willingness to comply with regulatory standards while challenging what it perceives as excessive punitive measures. Additionally, the company claims that it has not caused monetary losses to institutional investors.
At press time, XRP was trading at $0.5218.
Featured image from Shutterstock, chart from TradingView.com
