The US Securities and Exchange Commission (SEC) has demanded a staggering $770 million from Ripple Labs to settle the ongoing lawsuit related to the digital currency XRP. The demand comes after the SEC dropped all charges against Ripple executives Brad Garlinghouse and Christian Larsen.
John Deaton, the lawyer representing over 75,000 XRP holders, took to Twitter on October 26 to reveal that there has been no substantial dialogue regarding a potential settlement between Ripple and the SEC. He expressed his belief that the SEC is “pissed and embarrassed” over the dismissal of its charges and is now seeking $770 million as a form of financial recompense.
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Deaton further elaborated that the ongoing legal phase represents a separate case, commonly referred to as the “penalty phase,” which involves various legal procedures such as depositions, document requests, and examination of ODL transactions, among others.
As I said on @CryptoLawUS TV yesterday with @attorneyjeremy1 and Thien-Vu, I do not believe there has been a single serious conversation regarding settlement between @Ripple @bgarlinghouse @chrislarsensf and the @SECGov.
The SEC is pissed and embarrassed and wants $770M worth… https://t.co/kcXvsrPgaa
— John E Deaton (@JohnEDeaton1) October 25, 2023
Ripple’s Efforts to Reduce the Fine
Ripple, in response to the substantial fine sought by the SEC, is determined to significantly reduce the $770 million penalty. To achieve this, Ripple aims to exclude certain on-demand liquidity (ODL) transactions, implement cost-cutting measures, and make adjustments to its salary structure.
However, Deaton cautioned that a final verdict from Judge Torres is not expected until late summer 2024, and even after that, it could take an additional year for an appeal to be filed.
Lingering Legal Battles and Mounting Expenses
During the extended period of legal proceedings, Ripple is anticipated to incur substantial financial strain due to the skyrocketing legal expenses. It is projected that the company’s legal costs could reach tens of millions of dollars as it navigates the complex legal landscape in an effort to secure a favorable resolution or defend itself if the case proceeds to trial.
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The SEC’s demand for a $770 million settlement represents a significant turning point in the ongoing XRP lawsuit. At present, it remains uncertain whether Ripple will be able to negotiate a lower settlement with the SEC or if the matter will ultimately proceed to trial.
Should the case go to trial, it is expected to be a protracted process, prolonging the resolution for several years and exacerbating Ripple’s financial burdens.
The outcome of the Ripple-SEC lawsuit carries substantial implications for the broader cryptocurrency industry. A ruling in favor of the SEC could establish a precedent for future regulatory actions and pave the way for increased scrutiny.
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