The ongoing legal dispute between Ripple and the U.S. Securities and Exchange Commission (SEC) has taken a new turn, with legal expert Jeremy Hogan raising the possibility that Ripple might settle its $125 million penalty in XRP rather than cash.
The suggestion, which draws from historical legal precedent, could offer an alternative method of compliance if the SEC and U.S. Treasury were to accept such a payment structure.
Ripple’s Legal Penalty and SEC Ruling
In August 2023, a federal judge ruled that Ripple had violated securities laws by selling XRP to institutional investors without proper registration.
As a result, the court imposed a $125 million fine and issued a permanent injunction to prevent similar violations in the future. This penalty was a significant outcome of the long-running legal battle, shaping how Ripple operates within the U.S. regulatory framework.
While the company has made clear its intention to comply with legal rulings, the method by which it may settle the penalty is now under discussion.
Attorney Jeremy Hogan recently suggested that the SEC could allow Ripple to pay the fine in XRP instead of U.S. dollars.
Legal Precedent and XRP as Payment
Hogan’s argument is based on an 1869 U.S. Supreme Court case, which allowed a contract to be fulfilled in gold rather than cash. The principle behind that decision was that specific performance—in this case, paying a debt in a particular asset—could be an acceptable alternative under certain circumstances.
Applying this logic to the current situation, Hogan suggests that Ripple and the SEC could agree to settle the fine using XRP, particularly given that the U.S. Treasury manages digital asset holdings and might have a mechanism for accepting such a payment.
However, this approach faces obstacles. The fine imposed on Ripple is a penalty, and penalties are typically paid directly to the U.S. Treasury in cash. The idea will not move forward if the SEC does not agree to an alternative payment method.
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U.S. Treasury’s Role in Digital Asset Holdings
The U.S. government’s strategy regarding digital assets has also come under scrutiny in this context. While Bitcoin has been designated as a long-term reserve asset and placed in the Strategic Bitcoin Reserve, other cryptocurrencies, including XRP, do not appear to receive the same treatment.
Instead, XRP and assets like Cardano and Solana may be categorized under the U.S. Digital Asset Stockpile. This classification could allow the Treasury to sell these holdings at its discretion.
If Ripple were to pay its fine in XRP, it remains uncertain whether the Treasury would retain or liquidate them. The decision could have implications for the market, given that a large-scale sale of XRP by the government could influence the asset’s price.
Future Implications for Ripple and XRP
Hogan’s perspective has sparked debate within the cryptocurrency community about the feasibility and potential impact of such a settlement method. Whether the SEC and Treasury would be willing to accept XRP in place of cash remains unclear. However, the discussion highlights ongoing uncertainties in how digital assets are treated under U.S. regulations.
Ripple’s approach to resolving its penalty will be closely watched as the legal proceedings continue. If an agreement allowing payment in XRP were reached, it could set a precedent for other cryptocurrency-related cases in the future. However, the possibility remains purely speculative without official approval from regulatory authorities.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
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