- Attorney Deaton predicts that Ripple might pay a fine less than the amount spent on legal fees in its lawsuit with the SEC, which exceeds $150 million.
- Key legal precedents and the nature of XRP sales could significantly reduce the $770 million disgorgement amount initially speculated.
Ripple’s Anticipated Outcome in SEC Lawsuit
Ripple, a prominent blockchain company, finds itself at a crucial juncture in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). Attorney John Deaton, closely following the case, speculates that Ripple could end up paying a fine considerably lower than its legal expenses, which have already surpassed $150 million.
Judge Torres’ Recent Order and Its Implications
Recently, Judge Analisa Torres issued an order for the remedies phase of the SEC v. Ripple case, marking a significant step forward in the legal process. This phase is critical as it will determine the appropriate fine for Ripple‘s alleged violation of the law through the sale of $770 million worth of XRP to institutional clients.
Factors Influencing the Potential Fine Reduction
Deaton, during his appearance on Crypto-Law, highlighted several factors that might play a pivotal role in reducing Ripple‘s penalty. A key consideration is the Supreme Court’s Morrison ruling, which could allow Ripple to exclude XRP sales conducted outside the U.S. from the SEC’s jurisdiction. This aspect is significant given that Ripple executives Brad Garlinghouse and Chris Larsen have indicated that a major portion of their individual XRP sales occurred outside the U.S.
Deaton speculates that this scenario might also apply to Ripple’s institutional XRP sales, potentially affecting up to 90% of the $770 million in question. Such a large exclusion could drastically reduce the disgorgement amount.
Additionally, legal precedents from cases like Liu v. SEC and SEC v. Govil may come into play. These rulings mandate that disgorgement should compensate investors who suffered actual financial harm. Ripple, therefore, might only need to pay disgorgement to XRP investors who bought the token at a price higher than its current value. Given that a significant amount of Ripple’s institutional XRP sales were below the current price, this could further reduce the disgorgement fee.
Legal Expenses vs. Disgorgement Fee
Deaton strongly believes that the final disgorgement fee will be much lower than anticipated. This prediction is particularly noteworthy considering Ripple‘s substantial legal expenditures in defending against the SEC lawsuit. Garlinghouse has revealed that the company has already incurred over $150 million in legal fees, a figure that may increase as the case progresses.
In conclusion, the ongoing legal battle between Ripple and the SEC has entered a decisive phase, with implications not only for Ripple but for the broader cryptocurrency market. The case’s outcome, influenced by legal precedents and the nature of XRP’s sales, could set a precedent for future regulatory actions against crypto assets. As the case moves into the remedies phase, the focus remains on the potential financial impact on Ripple and the broader implications for the crypto industry.