Update on Ripple’s lawsuit against SEC on July 11

TL;DR

Ripple has scored significant partial legal victories in its ongoing battle with the SEC through 2023. The potential penalty remains in dispute, with the SEC proposing $102.6 million and the company arguing for a maximum of $10 million . Presentation after presentation

The legal dispute between Ripple and the US Securities and Exchange Commission (SEC) remains one of the most intriguing topics in the crypto space. It dates back to December 2020 when the regulator sued the company, accusing it of illegally raising more than $1.3 billion in an unregistered securities offering by selling XRP.

The parties fired numerous shots at each other in the following years, with the lead going back and forth. According to some industry participants, Ripple currently has the upper hand after securing three vital (albeit partial) victories.

In July of last year, Judge Torres ruled that the firm’s programmatic sales on secondary trading platforms do not constitute offers of investment contracts. The decision was followed by a bull run for XRP, whose price soared more than 70% in a 24-hour period.

Magistrates later dismissed the SEC’s intentions to appeal the ruling, while Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen were cleared of all charges brought by the agency

The case entered its trial phase in April this year, but instead of a definitive settlement, it offered further confrontation. Ripple recently pointed to Judge Amy Jackson’s decision to reject the SEC’s claims that secondary market sales of Binance’s BNB token constituted securities transactions.

The company’s defense filed a Notice of Supplemental Authority, arguing that the ruling supports its argument that the alleged illegal sales of XRP do not warrant “harsh remedies.”

The Commission reacted quickly and presented an official response on 3 July. He maintained that the case against Binance is “completely irrelevant” to the one against Ripple.

The Possible Pena

Ripple’s potential fine has become another point of contention in the lawsuit. The SEC initially sought a staggering penalty of $2 billion, while the company insisted on no more than $10 million.

Ripple compared the lawsuit to the one between the watchdog and Terraform Labs, saying direct allegations of fraud were only apparent in the lawsuit against the defunct crypto company.

Soon after, the SEC softened its tone, proposing a penalty of $102.6 million:

“Ripple avoids comparing the Terraform settlement penalty to the gross profit from the infringing conduct. This ratio ($420 million / $3.587 billion) is significantly higher: 11.7%. Applying it to the 876, $3 million in gross profits, the SEC is asking the court here to disburse it, resulting in a much larger figure, a penalty of $102.6 million, than the $10 million cap it insists on Ripple.

Is there a resolution coming?

Although the case is in its final stages, an outcome could drag on indefinitely due to the complexity of the court process and potential appeals from both sides.

However, some optimists believe a deal could happen in the coming weeks. An example is the American lawyer Fred Rispoli. He indicated July 31 as a possible date, predicting that the resolution would include a penalty of no more than $25 million for Ripple and a $0 dump.

“Judge rules that all sales it found illegal are permanently enjoined and rules that all ‘new’ contracts referred to by Ripple are not properly before it, so SEC will have to sue again if he thinks they violate his decision,” the lawyer imagined.

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