In a startling development, Judge Analisa Torres of the Southern District of New York (SDNY) issues the final judgment in the multi-year legal tussle between the SEC and Ripple.
Like the summary judgment decision in the case, the recently issued final judgment was a partial victory for the parties.
#XRPCommunity #SECGov v. #Ripple #XRP BREAKING: Judge Torres has issued the Final Judgment in SEC v. Ripple.https://t.co/wAYc8A3AbE
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) August 7, 2024
Court Orders Ripple to Pay $125M Instead of $2B
Recall that the SEC initially sought a penalty of nearly $2 billion, comprising $876.3 million each for civil penalty and disgorgement and an additional $198.15 million in prejudgment interest. The SEC also requested a permanent injunction on Ripple’s institutional XRP sales to prevent future violations of federal securities laws.
In the final judgment, the court denied the SEC’s disgorgement and prejudgment interest request. Judge Torres said the commission did not show that institutional investors suffered pecuniary harm to warrant disgorgement. However, she ordered Ripple to pay a civil penalty of $125,035,150 ($125.03 million) instead of the $876.3 million the SEC sought.
Judge Imposes Permanent Injunction on Ripple’s Institutional XRP Sales
Notably, Judge Torres granted the SEC’s request for a permanent injunction, banning Ripple from violating federal securities law in the future.
The judge suggested that there is a likelihood that the company might violate federal securities law in the future, as reflected in its “willingness to push the boundaries of the [summary judgment] order.”
As a result, Judge Torres “ORDERED, ADJUDGED, AND DECREED that Ripple is permanently restrained and enjoined from violating Section 5 of the Securities Act by, directly or indirectly, in the absence of any applicable exemption.”
Can Ripple Still Sell XRP to U.S. Institutions?
Following this order, there is an ongoing debate regarding whether Ripple can sell XRP to institutional clients. Several XRP community members suggested that Ripple will no longer be allowed to sell XRP to U.S.-based institutional clients.
Expectedly, top crypto stakeholders took to X to address some misconceptions regarding the injunction part of the ruling.
Matt Rosendin, founder of the digital asset security platform CapSign, emphasized that the decision does not prevent Ripple from selling XRP to institutions. He suggested that the decision requires Ripple to disclose future sales and obtain a federal securities exemption from the SEC.
Additionally, Attorney Jeremy Hogan shared the same sentiment, noting that Ripple can still sell XRP to institutions under an exemption and that the decision does not affect Ripple’s XRP sales to institutions outside the United States.
Furthermore, popular wealth author Linda P. Jones also joined the debate. According to her, Judge Torres’ injunction ruling only relates to Ripple’s XRP sales to “big corporations.” She asserted that the ruling is not an issue since Ripple stopped the practice long ago.
Lawyer Says Both Parties Will Appeal
Meanwhile, it remains to be seen whether the SEC or Ripple will appeal the court’s summary or final judgment. The SEC failed in its attempt to appeal the court’s summary judgment on programmatic sales, which were declared non-investment contracts.
With the case now concluded at the district court level, it is unclear whether the SEC would appeal the decision in the Second Circuit. Interestingly, famous crypto lawyer James Murphy (a.k.a MetaLawMan) predicted that both parties would appeal.
He stated that the $125.03 million penalty imposed against Ripple is a fraction of the SEC’s $2 billion request. Also, he highlighted the injunction part of the final judgment, which detects Ripple’s future XRP sales to institutions.
