Ripple, a leading crypto payments company based in San Francisco, is pushing back against the SEC’s demand for it to pay nearly $2 billion in fines for violating securities law with its XRP institutional sales. In response, Ripple has filed an opposition brief arguing that the SEC has failed to provide sufficient evidence to justify such a steep penalty.
In its opposition brief, Ripple presents three main arguments against the SEC’s demand. Firstly, Ripple contends that the SEC has not shown why an injunction is necessary. The company asserts that there is no reasonable possibility of future violations related to its institutional sales of XRP.
Secondly, Ripple emphasizes that the SEC has not proven the need for disgorgement in this case. The company cites the Second Circuit ruling in the Govil lawsuit, which states that disgorgement is not appropriate unless the SEC can demonstrate that investors suffered financial harm. Ripple also references the Liu ruling from 2020, which states that disgorgement should be limited to the net profits of the violator. Ripple argues that its legitimate business expenses should be deducted from any disgorgement amount awarded to the SEC.
Lastly, Ripple argues that the civil penalty should be significantly reduced to $10 million instead of the proposed $876 million. The company asserts that the facts of the case support a lower penalty, and that the SEC’s demand is excessive.
The next phase of the Ripple vs. SEC legal battle will involve the SEC filing a reply to Ripple’s opposition brief on May 6, 2024. The court will then issue its final judgment. Ripple CTO David Schwartz expects a resolution to be reached before the end of the year.
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