Ripple Labs and the United States Securities and Exchange Commission (SEC) have made significant progress in their ongoing litigation as the SEC has filed its final response in the remedial phase of the litigation.
In its latest response to the brief, the SEC questioned Ripple’s assertion that the blockchain startup acted without negligence and that there should not be “widespread uncertainty” about the legal status of XRP, although the court said that ” “Fair Notice” defense had previously rejected. The SEC also maintains its position that it is likely that Ripple will engage in similar actions in the future.
SEC argues against Ripple’s claims of cooperation
The remedial brief states that Ripple has attempted to minimize its liability by highlighting its cooperation with the SEC since the XRP Initial Coin Offering in 2013. However, the SEC has emphasized that further violation is possible under the law, even though Ripple has not committed any violations since 2020.
The SEC claims that Ripple’s commitments to change its behavior after the lawsuit do not justify avoiding an injunction. She argues that Ripple does not understand the court order and does not recognize its impact on compliance.
More of the same from the SEC — failing to faithfully apply the law and trying to pull the wool over the Judge’s eyes. The good news is that we are closer than ever to putting this lawsuit behind us, though unfortunately, many are just starting the journey. We trust the Court… https://t.co/JGhxAtOuk1
— Stuart Alderoty (@s_alderoty) May 7, 2024
The SEC’s response questions Ripple’s claims regarding sales outside the United States and to accredited investors. In response to the SEC’s arguments in the appeals brief, Ripple’s general counsel, Stuart Alderoty, commented on the SEC’s declining reputation.
“If you are a financial regulator outside the U.S. and have done the hard work of creating a comprehensive crypto licensing framework, you should know that the SEC has no respect for you and thinks you are handing out the equivalent of fishing licenses.”
He noted that international financial regulators with robust crypto licensing frameworks may find the SEC’s efforts surprising, likening it to issuing fishing licenses. Alderoty criticized the commission for its inconsistent application of the law and expressed optimism about the resolution of the XRP lawsuit. Despite Ripple’s claims of acting without recklessness and minimizing uncertainty about XRP’s legal status, the SEC stands by its position and questions the likelihood that Ripple will undertake similar actions.
Ripple has previously defended itself against a 2 billion USD fine and most of the allegations
Ripple recently pushed back against the Securities and Exchange Commission’s (SEC) demand for a $2 billion penalty, arguing that the proposed penalty is disproportionate and punitive. Through its defense attorney, James Filan, the company has filed a detailed motion denying the SEC’s claims and instead proposing a much lower penalty of 10 million USD.
Ripple maintains that no allegations or findings of reckless behavior or fraudulent activity would justify such significant financial penalties. Additionally, Ripple claims that its XRP sales were conducted transparently and with knowledgeable institutional investors who were fully informed about the transactions. Ripple points to its significant legal victories throughout the litigation and suggests that the SEC’s punitive demands are not consistent with the consistent with the court’s findings.
The company argues that the SEC’s demand is evidence of ongoing intimidation of the crypto industry in the United States, especially considering there are no allegations of frivolity or fraud in this case. Ripple is proposing a much lower penalty of 10 million dollars, which is more reasonable given the nature of the alleged violations and the Company’s conduct.
Ripple believes that this amount is commensurate with legal interests without being disproportionate. According to analysts, the final judgment in this case is expected to be made in September. The court will decide on the penalties, and Ripple is confident that the judge will act fairly at the final remedies stage.
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