Ripple seeks to pay only $10 million in civil penalty for its securities law violation, arguing that the SEC failed to demonstrate why an injunction and disgorgement is warranted.
Leading San Francisco-based crypto payments company Ripple has filed its opposition brief to the SEC’s push to have it pay nearly $2 billion for violating securities law via its XRP institutional sales.
Notably, seasoned crypto lawyer James K. Filan shared the development on X.
#XRPCommunity #SECGov v. #Ripple #XRP@Ripple has filed its Opposition to the @SECGov's Motion for Remedies and Entry of Final Judgment.https://t.co/Q0OOay1jdt
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) April 23, 2024
For context, in the SEC’s opening remedies brief, the regulator requested a civil penalty of $876.3 million, another $876.3 million in disgorgement, and a prejudgment interest of $198.15 million, bringing the total proposed fine to $1.95 billion.
Ripple’s 3 Major Arguments
Per the opposition brief filed yesterday, Ripple raised three major arguments to counter the SEC’s hefty demand of nearly $2 billion.
First, Ripple argued that the regulatory agency did not demonstrate any justification regarding whether an injunction was necessary. The leading crypto payments company asserted that the SEC failed to establish a reasonable possibility for future violations in its institutional-related XRP sales.
For the second argument, Ripple emphasized that the SEC has not also demonstrated the need for a disgorgement in the case.
As expected, Ripple cited the Second Circuit ruling in the Govil lawsuit, which bars disgorgement due to the regulatory agency’s inability to show that investors suffered financial harm.
Furthermore, Ripple also leveraged the Liu ruling in 2020, which held that disgorgement should be limited to the net profits of a securities act violator. In particular, Ripple argued that the court should deduct its legitimate business expenses from any disgorgement amount awarded to the SEC.
Lastly, Ripple argued that any civil penalty should be at most $10 million instead of the whopping $876 million the SEC seeks. Notably, Ripple argued that the relevant facts of the case support a lower civil penalty rather than the high demand the SEC made.
Ripple vs. SEC: Next Phase
Meanwhile, the SEC’s reply to Ripple’s remedies-related opposition brief will be filed on May 6, 2024. Afterward, the court would issue its final judgment.
As reported earlier, Ripple CTO David Schwartz expects a final resolution to occur before the end of the year.
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