Attorney Murphy Identifies Peculiar Aspect of SEC’s Disgorgement Demand in Ripple Lawsuit
Respected legal expert James “MetaLawMan” Murphy has provided fresh insights into the ongoing SEC v. Ripple lawsuit, specifically focusing on the regulator’s demand for disgorgement.
Disgorgement, within the context of securities regulations, refers to surrendering any illegally obtained profits from unlawful activities.
In the SEC’s initial remedies-related brief, the regulator requested that the court impose a hefty $2 billion penalty on Ripple for violating federal securities laws. The SEC’s sought-after fine comprises $876.3 million in disgorgement, an additional $876.3 million in civil penalties, and $198.15 million in prejudgment interest.
Highlighting the issue, Murphy noted that the U.S. Supreme Court has previously established that all disgorged funds should be allocated to the victims of the case.
“One thing the U.S. Supreme Court has made abundantly clear is that disgorgement should benefit the victims,” he stated during a recent interview on the Good Morning Crypto podcast.
Murphy emphasized that any funds recovered by the SEC through disgorgement would be distributed to the victims of the Ripple case. It is worth noting that the so-called victims in this instance are institutional buyers of XRP.
To illustrate the point, Attorney Murphy explained that should the SEC emerge victorious, it would direct the disgorged funds to institutional buyers of XRP, without retaining any for itself or the United States Treasury.
According to Murphy, this action would only serve to enrich institutional buyers of XRP further, as they have already profited from their interactions with Ripple.
“Imagine sending tens of millions of dollars to large institutions that have already made a profit from their dealings with Ripple. That is what has to happen. The most evident aspect of this entire situation is that the disgorged money must go to these ‘victims,'” Attorney Murphy commented.
Ripple Shares Similar Perspective
Additionally, Murphy shared an excerpt from Ripple’s response brief, which highlighted the company’s similar argument.
In the motion, Ripple contended that disgorgement for institutional buyers of XRP, who have already reaped the benefits of their investments, would be an unjust windfall.
The company used this argument to support its position that no disgorgement was warranted, urging the court to impose a civil penalty of no more than $10 million.
SEC Aims to Enrich Institutional Customers
Unsurprisingly, Murphy’s analysis has garnered reactions from other pro-XRP lawyers, including Attorney Bill Morgan.
In response, Attorney Morgan criticized the SEC for intending to make XRP institutional customers wealthier through its disgorgement demand. He characterized this demand as one of the anomalies in the Ripple lawsuit, which ultimately benefits no one.
Meanwhile, the involved parties have filed the necessary remedies-related brief and are currently in the process of filing omnibus motions pertaining to the sealing of confidential information related to the remedies brief.
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