The anticipation for the final decision in the SEC v. Ripple lawsuit has begun as the United States Securities and Exchange Commission (SEC) submits its redacted response and supporting exhibits. The SEC submitted these documents after discussions with Ripple’s legal team in order to identify what needed to be redacted.
In its filing, the SEC countered Ripple’s opposition to its initial remedies brief. Ripple, a leading cryptocurrency payments company, had objected to the SEC’s request for an injunction and disgorgement, arguing that both sanctions were unwarranted. Instead, Ripple requested that the court impose a civil penalty of no more than $10 million, significantly less than the $876 million sought by the SEC.
The SEC responded by arguing that the court should grant the requested injunction, as Ripple has the potential to continue violating the law through its sales of XRP to institutional clients. The SEC claimed that Ripple’s entire business revolves around selling XRP to these clients, including ODL customers, and therefore it is likely to violate the law in its future sales.
Additionally, the SEC accused Ripple of not complying with the court’s order regarding post-complaint ODL sales. The SEC contended that Ripple should have engaged in programmatic sales, which are considered non-securities, instead of continuing to sell XRP to institutional clients, which the court deems to be investment contracts.
The SEC also criticized Ripple for attempting to re-litigate the summary judgment ruling on ODL sales, emphasizing that Ripple can only appeal the judgment and not re-litigate it.
Regarding the issue of disgorgement, the SEC dismissed Ripple’s argument as meritless, stating that Ripple did not dispute the fact that it made “ill-gotten” gains from XRP sales. The SEC also criticized Ripple for narrowly interpreting the concept of financial harm by referencing the Govil lawsuit.
Finally, the SEC argued for a significant penalty against Ripple to deter future violations. While Ripple requested a civil penalty of no more than $10 million, the SEC argued that this amount would not sufficiently punish Ripple for its violations.
Legal practitioners have reacted to the SEC’s reply, with some predicting that the court will grant the SEC’s request for a permanent injunction on Ripple’s ODL sales. They criticized Ripple for failing to distinguish between institutional and programmatic sales during the summary judgment stage and suggested that Ripple would need to address this matter on appeal.
Crypto enthusiasts are eagerly awaiting the final verdict, which is expected to be issued this year. However, the exact timing is uncertain. After the district court ruling, any party can choose to appeal the verdict in the Second Circuit, potentially prolonging the legal battle.
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