The Securities and Exchange Commission (SEC) has submitted its final brief in the ongoing legal dispute with Ripple Labs, accompanied by supporting exhibits. This filing represents a crucial moment in the litigation as it precedes Judge Torres' impending ruling on remedies.
Bill Morgan, a prominent pro-XRP lawyer, offered a detailed analysis of the SEC's final brief, highlighting the nuances of the legal arguments and their potential impact on Ripple and its operations. One key area of contention continues to be the issue of financial harm to institutional buyers of XRP.
The SEC maintains that financial harm should encompass not only direct losses but also missed opportunities for greater profits resulting from less favorable terms in the purchase of XRP. Morgan observed that the SEC's reply brief doesn't introduce any new arguments regarding financial harm. He expressed skepticism about the likelihood of disgorgement, stating that while it's uncertain, he doesn't anticipate it being ordered.
Additionally, the SEC's final brief strongly advocates for a permanent injunction that would constrain Ripple's future sales of XRP, particularly to its On-Demand Liquidity (ODL) customers. According to Morgan, the SEC contends that an injunction is warranted because the bulk of Ripple's current business revolves around selling XRP to institutions.
Furthermore, the SEC asserts that Ripple has abandoned several defenses it previously asserted, such as the extra-territoriality of its sales to accredited investors, particularly in institutional transactions. This, according to the SEC, suggests a strategic retreat by Ripple in response to unfavorable legal analysis and precedents.
In response to the SEC's filing, Ripple's Chief Legal Officer, Stuart Alderoty, strongly criticized the SEC's approach, accusing it of failing to apply the law faithfully and attempting to deceive the judge. Alderoty expressed optimism about concluding the lawsuit soon but acknowledged that many are just beginning their legal journey. He expressed trust in the court to approach the remedies phase impartially.
Alderoty also criticized the SEC's attitude towards international regulatory frameworks, particularly disparaging its lack of respect for financial regulators outside the US who have established comprehensive crypto licensing frameworks.
Financially, the stakes are significant, with the SEC seeking fines and penalties that could amount to approximately $2 billion, underscoring its severity regarding the alleged regulatory violations. In contrast, Ripple has proposed a maximum penalty of $10 million, arguing that the SEC's demands are disproportionately high compared to penalties in similar cases.
Ripple maintains that it has implemented significant changes to its XRP institutional sales practices to prevent future violations, signaling its commitment to compliance with regulatory standards while challenging what it sees as excessive punitive measures. Moreover, the company asserts that it did not cause monetary losses to institutional investors.
May 2024, Cryptoniteuae