The wait for the final verdict in the ongoing SEC v. Ripple lawsuit begins as the United States Securities and Exchange Commission submits its redacted remedies reply and supporting exhibits.
The regulatory agency submitted the redacted documents following deliberations with Ripple’s counsel yesterday to identify necessary redactions.
According to the filing, the SEC countered Ripple’s opposition to its opening remedies brief. For the uninitiated, the leading crypto payments company opposed the SEC’s request for an injunction and disgorgement, noting that both sanctions are unwarranted.
Ripple also requested that the court award a civil penalty of no more than $10 million instead of the $876 million the SEC requested.
SEC Replies Ripple’s Opposition
In response, the SEC contended that the court should grant the requested injunction, as Ripple might continue to break the law via its institutional sales of XRP.
According to the SEC, Ripple’s entire business revolves around selling XRP to institutional clients, including ODL customers. As a result, the agency asserted that Ripple is bound to violate the law in its future sales of XRP.
Additionally, the SEC argued that Ripple is not following the court’s order regarding post-complaint ODL sales. According to the SEC, Ripple should have engaged more in programmatic sales, which were found to be non-securities, instead of continuing to sell XRP to ODL customers (institutional clients), a type of transaction the court deems to be investment contracts.
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Furthermore, the SEC slammed Ripple for attempting to relitigate the summary judgment ruling on ODL sales. The SEC pointed out that Ripple can only appeal the judgment on ODL sales and not relitigate it.
Regarding the issue of unwarranted disgorgement, the SEC characterized Ripple’s argument as meritless. The agency said Ripple did not dispute the fact that it made “ill-gotten” gains from its XRP sales. It also slammed Ripple’s reference to the Govil lawsuit, claiming that the firm narrowly interpreted the concept of financial harm.
The financial harm issue is relevant to the Ripple lawsuit as it would determine whether a disgorgement is warranted.
Lastly, the SEC advocated imposing a large penalty against Ripple to deter the company from future violations. The SEC argued that while Ripple asked the court to impose not more than $10 million in civil penalty, it failed to demonstrate how the “negligible” penalty could punish its violations.
Pro-XRP Lawyers React
Meanwhile, the SEC’s reply elicited reactions from legal practitioners, who took to X to analyze the filing and predict the ruling’s outcome.
Attorney Bill Morgan speculated that the court would grant the SEC’s permanent injunction request, affecting Ripple’s ODL sales.
While Attorney Morgan believes the court was wrong to classify ODL sales as investment contracts, he criticized Ripple for failing to distinguish the sales from institutional and programmatic sales during the summary judgment stage.
Nonetheless, he suggested that Ripple would need to address the matter on appeal.
The SEC Reply is quite interesting and in some respects on the injunction issue compelling.
1. The issue of financial harm
This issue is relevant to whether there should be any disgorgement. This requires that there be some financial harm to institutional buyers of XRP from…
— bill morgan (@Belisarius2020) May 8, 2024
Popular XRP advocate and lawyer Jeremy Hogan also reacted to the SEC’s reply, emphasizing that the briefs are finished. Attorney Hogan said the SEC added nothing new to the damages argument.
“Just waiting for The Judge now!” he remarked.
The Ripple v. SEC briefs are FINISHED!
And I think the SEC went out with a whimper here.
It didn’t even try to attack ODL sales, just noting that Ripple was trying to re-litigate the issue (which it is).
And it brought nothing new on damages.
Just waiting for The Judge now! https://t.co/r8nxNMTzqj pic.twitter.com/Futa93lXUb
— Jeremy Hogan (@attorneyjeremy1) May 8, 2024
Crypto Enthusiasts Anticipate Final Verdict
As Hogan said, the crypto community is anticipating the final verdict, which many expect to be issued this year. As reported earlier, Ashley Prosper predicted that the judge would issue the verdict between July and September 2024.
Whether the judge would issue the ruling within, before, or after the predicted timeline remains uncertain. However, the ruling would mark the end of the lawsuit at the district court level.
Any aggrieved party can choose to appeal the verdict in the Second Circuit, thus potentially extending the legal tussle beyond 2025.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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