Reportedly, a total sum of $600 million is to be paid to the United States Securities and Exchange Commission (SEC) as disgorgement penalties by the two Ripple executives if the SEC wins them.
Per a thread, the attorney representing over 75k XRP holders in the longstanding Ripple-SEC case, painstakingly detailed several facts that would make it hard for the two Ripple executives – Chris Larsen and Brad Garlinghouse – to lose their case with the SEC.
Ripple Executives Predicted To Win the SEC
In December 2020, the US securities agency sued Ripple, contending that the cross-border payment firm sold XRP as unregistered securities to investors. Concurrently, the SEC sued two Ripple executives, Brad Garlinghouse and Chris Larsen.
As the court battle seems to be winding down gradually, Sasha Hodder, the founder of Hodder Law Firm disclosed the fine both defendants would pay to the SEC if they lose the case. According to her, Christian Larsen and Brad Garlinghouse would have to pay $450 million and $150 million respectively as disgorgement fines.
If Ripple loses, Larsen will owe the SEC $450 million and Garlinghouse $150 million in disgorgement penalties.
— Sasha Hodder (@sashahodler) December 7, 2022
In response to this, several XRP supporters like Attorney Jeremy Hogan and Attorney John Deaton implied that it is almost impossible for either of the two Ripple executives to lose with valid facts.
According to Hogan, “the SEC has a completely different (and harder) legal standard to prove as to Larsen and Garlinghouse. Ripple could lose 100% and the individual Defendants could still very well win.”
Meanwhile, Deaton emphasized that for the SEC to win against Garlinghouse and Larsen, the judge has to give a verdict that both executives were reckless in not knowing XRP was a security, citing reasons such a conclusion may never happen. “Remember, they can be negligent, but the burden of proof is they must be found reckless – meaning no reasonable person could believe that XRP was not a security,” he pointed out.
Related: Brad Garlinghouse States What Would Make Ripple Accept Settlement in XRP Lawsuit
John Deaton Says Ripple Execs Were Not Reckless
In expressing that XRP is not a security and Ripple executives were not reckless in not knowing it was a security, he noted that “SEC enforcement lawyers were allowed to own and trade XRP until March of 2019.” According to him, the U.S. Government Accountability Office (USGAO) classified XRP as a virtual currency utilized in a decentralized payment system in 2014.
Likewise, the top attorney revealed that the Commodities Futures Trading Commission (CFTC), an independent federal regulatory agency tasked with overseeing the U.S. derivatives markets stated that Bitcoin (BTC) and other similar cryptocurrencies are properly classified commodities. Again, this implies that XRP is not a security.
Referring to the 2018 controversial speech given by William Hinman, Deaton further inferred that XRP was indirectly termed a non-security by the U.S. securities agency when the ex-SEC staff declared BTC and ETH non-securities.
6) in 2019, the SEC published its Framework for Digital Assets and in that document it clearly states that any crypto asset that can immediately be used for payments and as a substitute for fiat currency “is unlikely to satisfy Howey” (the precise use case for #XRP);
— John E Deaton (@JohnEDeaton1) December 7, 2022
Read Also: Bank of America to Leverage Ripple ODL Services Once XRP Lawsuit Ends, Garlinghouse Affirms
Among many other facts, Deaton also noted that;
“In June 2018, SEC enforcement lawyers wrote an XRP Howey Memo, analyzing if XRP satisfied the Howey test and at the end of that XRP Howey analysis – conducted BY SEC enforcement lawyers (you know, experts in Howey) – they did NOT recommend enforcement or cease & desist.”
“In January 2019 Coinbase and its sophisticated expert lawyers in Howey met with the SEC informing it that Coinbase’s experienced securities lawyers concluded XRP was NOT a security (at least, not in 2019) and Coinbase listed XRP a month later in February 2019.”
On the whole, the staunch XRP supporter illustrated confidence that Ripple and its executives would scale through in the ongoing legal tussle with the Gary Gensler-led SEC.
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