The legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) reaches a critical juncture this week as Ripple prepares to file its opposition brief. This document will address the SEC’s remedies-related brief, which requested a nearly $2 billion penalty against Ripple.
In its earlier filing, the SEC argued that Ripple violated Section 5 of the Securities Act of 1933 by conducting unregistered offerings of XRP, its native cryptocurrency, in institutional sales.
Read Also: XRP Holders Lawyer Explains Why Ripple Would Pay the SEC A Lot Less Than $770 Million
Although the court ruled in 2023 that non-institutional sales of XRP were not securities offerings, the SEC can go after Ripple for institutional XRP sales. As a remedy, the SEC requested a final judgment against Ripple, including:
Disgorgement: $876,308,712, Prejudgment Interest: $198,150,940, and Civil Penalty: $876,308,712.
The total sum amounts to $1,950,768,364. Ripple executives have vehemently contested these charges, particularly the lack of fraud allegations and the existence of viable contracts for XRP sales. A settlement conference in late March failed to resolve the dispute, leading Ripple’s Chief Legal Officer to express frustration at the SEC’s approach, especially considering their involvement in eight other major cryptocurrency cases.
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Ripple’s Counterargument
On April 22, Ripple is scheduled to submit a redacted version of its opposition brief, along with supporting evidence. This document will likely address the SEC’s excessive penalties and its claim to a massive disgorgement.
Ripple could argue against the SEC’s exorbitant penalty request, emphasizing the absence of substantial evidence to justify such a high amount.
Ripple may also cite the SEC vs. Govil court ruling, which established that disgorgement cannot be imposed on the seller if buyers haven’t suffered financial losses. The SEC alleges that institutional investors incurred $480 million in damages, a claim Ripple will likely contest.
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Read Also: Ripple Faces Possible $3 Billion Fine, As XRP Lawsuit Takes New Turn: Details
Following a meeting between both parties on April 23, a public, redacted version of Ripple’s opposition brief will be filed on April 24. Ripple may also address the details of programmatic and secondary market sales in this document.
The SEC has until May 6 to submit its reply brief, which will likely be sealed. Both parties and third parties can file letter motions and opposition letters regarding the sealing of specific details in the filings until May 20.
The coming weeks hold immense significance for the Ripple vs. SEC lawsuit. The contents of Ripple’s opposition brief and the SEC’s subsequent reply will likely influence the direction of the case and potentially impact the XRP market. With neither party willing to give in, some believe the lawsuit might reach the Supreme Court.
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