Ripple versus SEC: Imminent Threat of $3 Billion Penalty
Once again, we find ourselves in a familiar position with the ongoing Ripple vs SEC case. The outcome is still uncertain, and a recent analysis by Zach Rector, a well-known financial expert and XRP YouTuber, suggests that Ripple could be facing a substantial penalty of over $3 billion if Judge Analisa Torres determines that sales related to On-Demand Liquidity (ODL) are considered securities. Currently, the lawsuit is in the remedies phase, and the SEC has filed a motion to compel Ripple to provide financial statements and information regarding institutional XRP sales.
The SEC’s request for these documents is still pending, with their formal submission made on January 11 to Magistrate Judge Sarah Netburn of the Southern District of New York. The request specifically asks the court to mandate Ripple to provide financial statements and sales contracts.
Despite numerous calls and emails, Ripple has not yet presented any documents following the complaint. In response to this, the SEC has requested two specific documents and an interrogatory.
In his YouTube video, Rector emphasizes the significant amount of money at stake for Ripple, as the SEC claims the company has sold approximately $3 billion worth of XRP since the beginning of the lawsuit. While the initial SEC claim was much higher, legal experts anticipate a reduction during the remedies proceeding. Rector predicts that if Judge Torres considers ODL-related sales as securities, the final penalty could exceed $3 billion.
Considering the recent chaos and the SEC’s actions, there is a possibility of a negative ruling. In such a scenario, Rector expects Ripple to file an appeal in the Second Circuit, especially if the judge determines that ODL-related XRP sales are considered investment contracts. Rector suggests that Ripple would likely challenge any such ruling, confident in their legal guidance.
However, the case is far from over. As Ripple prepares to respond to the SEC’s motion to compel, the remedies proceeding of the lawsuit is set to conclude by February 12, 2024, with the SEC’s final motion scheduled for April 29, 2024. While there is no official ruling date, Fred Rispoli, a lawyer in support of XRP, speculates that the judge may issue a decision in early summer, adding an element of anticipation to Ripple’s legal journey.
Both sides have been given additional time by the court, extending the discovery date for remedies. This schedule allows the SEC to present their case to the court and gives Ripple an opportunity to respond. There is speculation that a settlement may be on the horizon, considering the approaching dates and the history of tension between Ripple and the SEC.
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Ripple (XRP)