Despite the SEC scoring a victory against Ripple that could pave the way for an injunction, Attorney Bill Morgan says such a ruling cannot restrain ODL customers from using the solution.
With Magistrate Sarah Netburn granting the SEC’s motion to compel, legal experts have commented on the possibility of an injunction being imposed against Ripple to restrain ODL (On-Demand Liquidity) customers.
It is worth noting that one of the reasons why the SEC requested Ripple’s post-complaint financial records relating to institutional sales of XRP was to determine “whether an injunction is necessary and just.”
For context, ODL, now rebranded to Ripple Payments, is a user-friendly payment solution that leverages XRP as a bridge currency between two fiats for instantaneous and cost-effective cross-border settlements.
Following the recent ruling, XRP community members speculated that ODL customers might be restrained if the court issues an injunction against Ripple in the final judgment.
ODL Customers Won’t Be Restrained
On the contrary, Australian-based lawyer Bill Morgan asserted that any injunction will not restrain ODL customers.
ODL customers using ODL will not be restrained by an injunction. It is what sales of XRP by #Ripple to ODL customers could be restrained unless registered. As I understand ODL, it can work without the ODL customer needing to buy XRP from Ripple. They could buy it on secondary… https://t.co/WAmJRtSvHl pic.twitter.com/daiDOoI6uc
— bill morgan (@Belisarius2020) February 5, 2024
The legal expert who has closely followed the SEC v. Ripple lawsuit noted that the injunction could only affect Ripple’s XRP sales to ODL customers unless properly registered with the SEC.
Nevertheless, Attorney Morgan said even if the injunction affects Ripple’s XRP sales, ODL customers can still get XRP from secondary markets.
According to the legal expert, any potential injunction might not affect ODL customers outside the SEC’s regulatory purview.
Primary Concern of an Injunction
Per Morgan, the primary concern about an injunction is the practical and commercial challenge faced by Ripple. Attorney Morgan questions whether Ripple has a commercially viable alternative if the company cannot sell XRP directly to U.S.-based ODL customers.
The lawyer said the SEC is aware of the challenges Ripple faces if an injunction is granted. Hence, the crypto company could be under immense pressure if it cannot structure its future XRP sales in a legally compliant and commercially viable way.
Furthermore, Attorney Morgan said the issue of Ripple’s XRP sales to U.S.-based ODL customers could be a central point during the ongoing remedies phase and during a potential appeal.
Next Important Deadline in SEC v. Ripple Case
Meanwhile, the court has yet to determine whether it will issue an injunction preventing Ripple from selling XRP to U.S.-based ODL customers unless it registers with the SEC.
It only ordered the company to produce its audited financial records, which would help the court determine whether an injunction is necessary.
If Ripple’s extension request is granted, the company will have until February 20 to submit its financial documents. Notably, the records include Ripple’s audited financial statements from 2022 – 2023, contracts used to sell XRP to institutional clients after the SEC lawsuit was filed, and information regarding how much proceeds it made by selling XRP to institutional clients.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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