SEC Advocates for Injunctions in Final Response to Ripple XRP Case
By Hassan Shittu
May 8, 2024 09:00 EDT
Ripple Labs and the United States Securities and Exchange Commission (SEC) have made significant progress in their ongoing legal battle. The SEC has filed its final reply in the remedies stage of the lawsuit.
In its recent response to the remedies brief, the SEC challenges Ripple’s claim that it acted without recklessness and argues against the idea that there should be no “widespread uncertainty” about the legal status of XRP. The SEC maintains its position on the likelihood of Ripple engaging in similar actions in the future, despite the court previously rejecting the “fair notice” defense.
The remedies brief highlights Ripple’s attempt to minimize its liability while emphasizing its cooperation with the SEC since the 2013 XRP initial coin offering. However, the SEC stresses that another breach is still possible under the law, even if Ripple has abstained from violations since 2020.
The SEC argues that Ripple’s promises to change its conduct following the lawsuit do not warrant the avoidance of injunctions. It asserts that Ripple fails to understand the court order and its implications for compliance.
In response to the SEC’s arguments, Ripple’s chief legal officer, Stuart Alderoty, criticizes the commission for its inconsistent application of the law and expresses optimism about resolving the XRP lawsuit. He points out that international financial regulators with strong crypto licensing frameworks might find the SEC’s efforts surprising, comparing them to issuing fishing licenses.
Ripple recently opposed the SEC’s request for a $2 billion penalty, arguing that the proposed fines are disproportionate and punitive. The company filed a motion disputing the SEC’s penalty demands, suggesting a much lower penalty of $10 million instead.
Ripple contends that the SEC’s proposed penalties do not align with the actual circumstances of the case. The company asserts that its XRP sales were transparent and conducted with knowledgeable institutional investors who were fully informed about the transactions.
Ripple highlights its legal victories throughout the litigation, arguing that the SEC’s penalty demands are inconsistent with the court’s findings. The company believes that the SEC’s request is evidence of ongoing intimidation against the crypto industry in the United States.
Ripple proposes a lower penalty of $10 million, which it believes is more appropriate given the alleged violations and its conduct. The company contends that this amount would serve the legal interests without being disproportionately punitive.
Analysts expect the case to reach a final judgment around September, with the court deciding on penalties. Ripple expresses confidence in the judge’s fair approach to the final remedies phase.
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