Prominent attorney James K. Filan recently announced the completion of briefings in the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple. The SEC’s final reply brief has been unsealed, and this drew the attention of another prominent attorney, Jeremy Hogan, who was unimpressed with the SEC’s filing.
Hogan suggests that the SEC’s final brief may be less impactful than initially anticipated. He points out that the SEC seemingly avoided directly challenging Ripple’s sales of XRP through its On-Demand Liquidity (ODL) service, focusing instead on claims that Ripple is attempting to re-argue settled points. Additionally, he suggests the SEC did not present new evidence regarding potential damages.
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
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This perspective aligns with prior statements from Hogan, who previously predicted a court-ordered penalty of $100 million for Ripple. This prediction stands in contrast to the SEC’s initial request for a $2 billion penalty. The conclusion of the briefing phase now places the focus squarely on the presiding judge. Hogan and other observers anticipate appeals from either party regardless of the court’s final ruling.
Background of the Lawsuit
The SEC filed suit against Ripple in December 2020, alleging that the company’s sale of XRP violated securities laws. The SEC argues that sales of XRP are an investment contract and that Ripple failed to register the sales. Ripple maintained that XRP is not a security and is exempt from registration requirements. The court agreed with Ripple, ruling in July 2023 that non-institutional sales were not securities offerings.
ODL Sales and the SEC’s Strategy
Hogan’s observation regarding the SEC’s apparent avoidance of the ODL issue is noteworthy. ODL is a service offered by Ripple that facilitates cross-border payments using XRP. If the SEC were to successfully argue that XRP sales through ODL constitute unregistered securities offerings, it would significantly strengthen their overall case.
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However, Ripple has also moved away from XRP and is using USDT to settle ODL transactions for U.S. customers, showing a willingness to comply with the legal framework in the U.S., and further weakening the SEC’s claim to a large penalty.
With the briefing phase concluded, all parties await the judge’s decision. Following the verdict, appeals are highly likely, potentially leading to a protracted legal battle.
A significant class action lawsuit was recently filed against Coinbase, arguing that eight cryptocurrencies are securities. If the court rules against Coinbase, it could strengthen the SEC’s case if it appeals the July ruling.
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