Yassin Mobarak, a well-known cryptocurrency expert, has raised doubts about the Securities and Exchange Commission’s (SEC) ability to demand a $770 million penalty from Ripple if investors did not incur any financial damages.
The speculation comes following a significant setback for the SEC in its case against Aron Govil, a cryptocurrency entrepreneur charged with fraud. The Second Circuit Court of Appeals overturned the district court’s ruling and sent the case back for further consideration, specifically instructing the lower court to determine whether investors of Cemtrex suffered any financial harm.
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Mobarak argues that this decision could have implications for the ongoing SEC v. Ripple legal battle. If the SEC fails to demonstrate that XRP investors suffered financial damages, then demanding a $770 million penalty from Ripple for the company’s violation of securities law through XRP institutional sales would be unfounded.
This is significant. The SEC can't ask Ripple to pay $770 million in penalty for institutional sales if no harm has been inflicted on investors.
The SEC has to see the writing on the wall and realize that it will not penalize Ripple drastically through attempting to charge huge… https://t.co/iFPo3FplDz
— Yassin Mobarak 🪝 (@Dizer_YM) November 3, 2023
Stuart Alderoty, Chief Legal Officer of Ripple, also highlights the significance of the Second Circuit’s ruling in the Govil case as a major victory for Ripple. Alderoty emphasizes that the ruling establishes a precedent that the SEC cannot seek substantial disgorgement without first presenting evidence of financial harm suffered by investors.
The penalty phase of the Ripple lawsuit is set to begin soon, during which the amount Ripple will be required to pay for violating securities laws by selling $770 million worth of XRP to institutional clients will be determined.
It is important to note that leading legal experts, including Attorney John Deaton, believe that Ripple has the potential to significantly reduce the penalty by excluding legitimate business expenses and On-Demand Liquidity (ODL) sales from the calculation.
The SEC v. Ripple lawsuit has garnered significant attention from cryptocurrency experts and legal observers alike, as its outcome could have far-reaching implications for the entire cryptocurrency industry.
The Significance of Investor Protection and Regulatory Balance
Mobarak’s speculation sheds light on the critical issue of investor protection within the cryptocurrency industry. While the SEC has a duty to safeguard investors from fraud and misconduct, it must also exercise caution to avoid stifling innovation in the industry.
Read Also: Pro-XRP John Deaton Shares Likely Timeline For Ripple-SEC Case Final Judgement
Mobarak’s viewpoint suggests that the SEC may be overstepping its bounds in the case against Ripple. If the regulator is unable to demonstrate that XRP investors suffered financial harm, it raises questions as to why the SEC is pursuing a $770 million penalty against the company.
Another perspective on Mobarak’s speculation is that it could have a positive impact on the cryptocurrency industry as a whole. If the SEC fails to secure the $770 million penalty from Ripple, it could send a message to regulators that imposing significant fines on cryptocurrency companies without first establishing evidence of investor harm is unjustified.
Overall, Mobarak’s speculation represents a significant development in the SEC v. Ripple case and has broader implications for the cryptocurrency industry.
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