The wait for the final decision in the SEC v. Ripple lawsuit has begun as the United States Securities and Exchange Commission (SEC) has submitted its redacted response and supporting evidence. The SEC submitted these documents after consulting with Ripple’s legal team to determine what information 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 opposed the SEC’s request for an injunction and disgorgement, arguing that these sanctions were unjustified. Ripple also requested that the court impose a civil penalty of no more than $10 million, rather than the $876 million sought by the SEC.
In response, the SEC argued that the court should grant the requested injunction, as Ripple may continue to violate the law through its sales of XRP to institutional clients. The SEC claimed that Ripple’s entire business model revolves around selling XRP to institutional clients, including ODL customers, and that the company is likely to violate the law in future sales of XRP.
Furthermore, the SEC contended that Ripple has not complied with the court’s order regarding post-complaint ODL sales. The SEC argued that Ripple should have engaged more in programmatic sales, which were found to be non-securities, instead of continuing to sell XRP to ODL customers, a type of transaction that the court considers to be investment contracts.
The SEC also criticized Ripple for attempting to re-litigate the summary judgment ruling on ODL sales, stating that Ripple can only appeal the judgment and not re-litigate it.
Regarding the issue of disgorgement, the SEC dismissed Ripple’s argument as baseless. The agency stated that Ripple did not dispute the fact that it made “ill-gotten” gains from its XRP sales and criticized the company’s interpretation of financial harm in reference to the Govil lawsuit.
Lastly, the SEC advocated for a significant penalty against Ripple to deter future violations. The SEC argued that Ripple’s request for a civil penalty of no more than $10 million failed to demonstrate how such a minimal penalty would punish its violations.
Legal practitioners have reacted to the SEC’s response, with some predicting that the court will grant the SEC’s request for a permanent injunction affecting Ripple’s ODL sales. However, they also noted that Ripple may need to address this matter on appeal.
The crypto community is eagerly awaiting the final verdict, which is expected to be issued this year. While the exact timing of the ruling is uncertain, it will mark the end of the lawsuit at the district court level. However, any party dissatisfied with the verdict can choose to appeal it in the Second Circuit, potentially prolonging the legal battle beyond 2025.
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