SEC Files Redacted Remedies Reply Brief in Anticipation of Imminent Final Judgement in Ripple vs SEC Case
The Securities and Exchange Commission (SEC) has filed its redacted remedies reply brief and supporting exhibits, paving the way for a potentially groundbreaking ruling. As the legal battle intensifies, all attention is focused on the impending final judgment that could reshape the landscape for Ripple and other similar entities in the cryptocurrency industry.
Taking a closer look at Ripple’s legal troubles, the crux of the SEC’s argument revolves around the likelihood of Ripple repeating its past actions. By citing previous court rulings, the SEC underscores the ongoing risk posed by Ripple’s business operations, which continue to involve the sale of its XRP token without proper registration.
Since 2013, Ripple has primarily focused on these sales, and the company intends to issue a new unregistered cryptocurrency, further complicating its legal position. Court filings have clearly documented Ripple’s history of significant unregistered transactions, including its Over-the-Counter (OTC) Institutional Sales up until 2020.
Although there have been no new violations since 2020, the nature of Ripple’s activities makes future infractions a distinct possibility, justifying the need for an injunction to prevent recurrence.
The merits of an injunction are being debated, with the SEC meticulously addressing Ripple’s counterarguments. Ripple argues that it has not acted recklessly and cites the “widespread uncertainty” surrounding the legal status of XRP as a defense. However, the court has previously dismissed this “fair notice” defense, and similar defenses have failed in other cases involving firms like Coinbase.
Ripple also tries to downplay its liability by highlighting its voluntary cooperation with the SEC since 2013. However, the SEC argues that such cooperation does not negate the need for injunctive relief, as Ripple’s past behavior, including selling XRP as an investment despite legal advice against it, demonstrates a pattern of disregarding regulatory compliance.
The matter is further complicated by Ripple’s claims that it has made significant changes to avoid future violations. However, the SEC views these assurances skeptically, arguing that Ripple’s changes are inadequate and based on a misunderstanding of the legal guidelines for structuring its sales properly.
The discussion also delves into the financial consequences of Ripple’s actions, with the SEC refuting Ripple’s challenges to the disgorgement of ill-gotten gains. According to the SEC, Ripple’s failure to disclose certain financial terms has harmed institutional investors, who may have paid less if they had been fully informed about discounts and pricing strategies.