SEC Submits Final Brief in Ongoing Legal Battle Against Ripple, Pressing Further on XRP

In a significant development in the legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs, the SEC has submitted its final brief, including supportive evidence, ahead of Judge Torres’ decision on remedies. This marks a crucial juncture in the lawsuit as it is the final briefing before a remedial ruling is made.

The SEC’s final submission indicates a decisive day for Ripple is nearing, as outlined by lawyer Bill Morgan, a supporter of XRP, who provided a thorough analysis of the SEC’s brief on X. Morgan highlighted the nuances in the legal arguments and the potential impacts on Ripple and its operations. A key point of contention remains the financial damage to institutional buyers of XRP.

The SEC argues that financial losses should not only include direct damages but also missed opportunities for greater profits due to unfavorable conditions under which XRP was purchased. Morgan noted, “The SEC’s reply does not add any new substance to the financial damage argument.” He expressed skepticism about the possibility of disgorgement, stating, “I don’t see disgorgement happening, but the outcome is not clear.”

Furthermore, the SEC’s reply advocates for a permanent injunction to limit Ripple’s future sales of XRP, especially to its On-Demand Liquidity (ODL) customers. “The SEC believes an injunction should be issued because Ripple’s operations currently almost entirely involve selling XRP to institutional clients,” Morgan explained.

Additionally, the SEC claims that Ripple has abandoned several defenses it previously claimed, such as the extraterritoriality of its sales to accredited investors, particularly concerning institutional transactions. According to the SEC, this indicates that Ripple strategically retreated when faced with unfavorable legal analyses and precedents.

In response to the SEC’s filing, Ripple’s Chief Legal Officer Stuart Alderoty voiced strong objections, criticizing the SEC’s approach: “It’s more of the same from the SEC—failing to faithfully apply the law and attempting to deceive the judge.” Alderoty added, “The good news is that we are closer than ever to putting this lawsuit behind us, though unfortunately, many are just beginning this journey. We are confident that the court will handle the remediation phase fairly.”

Alderoty also sharply criticized the SEC’s respect for international regulatory frameworks: “Just when you think the SEC couldn’t sink any lower, if you are a financial regulator outside the U.S. who has worked hard to establish a comprehensive licensing framework for crypto, know that the SEC does not respect you and thinks you are issuing something akin to a fishing license.”

Economically, the stakes are high. The SEC is seeking fines and penalties potentially totaling around $2 billion, underscoring the severity of what it deems regulatory violations. Ripple has countered this by proposing a maximum fine of only $10 million, arguing that the SEC’s demands are excessive compared to penalties in similar cases.

Ripple argues that it has made significant changes to its XRP institutional sales practices to prevent future violations, indicating its willingness to comply with regulatory standards while challenging what it views as overly punitive measures. Moreover, the company argues that it did not cause financial losses to institutional investors.

As of this writing, XRP is trading at $0.5218.