- Attorney James Murphy challenges SEC’s plan, arguing disgorgement should directly compensate the true victims of violations.
- Ripple’s legal defense argues that SEC overlooks contractual realities, claiming institutional buyers were not misled.
The SEC and Ripple Labs center on a significant disgorgement request of $876 million. This request is part of an ongoing lawsuit concerning the sale of XRP, which the SEC claims was unregistered.
Want to know the craziest part about the SEC's demand for disgorgement in the @Ripple case?
This 👇 pic.twitter.com/Z5A0KQDf6o
— MetaLawMan (@MetaLawMan) May 14, 2024
Attorney James Murphy, known online as “MetaLawMan” challenges the SEC’s proposal that the disgorgement funds should be directed to institutional buyers of XRP. Citing a U.S. Supreme Court decision, Murphy points out that disgorgement should benefit the victims of the violation. He argues that directing funds to institutional buyers, who have profited from their dealings with Ripple, does not align with this legal standard.
“One thing the U.S. Supreme Court has been really clear about is that disgorgement is supposed to go to the victims.”
Murphy’s critique brings to light the question of how the disgorgement funds are allocated. The SEC suggests that these funds go to institutional investors, a group that may not represent the direct victims in this case. This approach raises concerns about the appropriateness and fairness of the disgorgement distribution.
In response, Ripple’s legal team, including attorney Bill Morgan, contests the SEC’s demands. Morgan states that the SEC’s understanding of financial harm ignores the actual contractual terms under which institutional buyers engaged with Ripple. According to Morgan, these transactions were conducted in compliance with existing legal frameworks, and the buyers were not misled.
Attorney Bill Morgan reposted Attorney James Murphy’s post, further adding his sentiment on behalf of Ripple. “The SEC’s theory of pecuniary harm ignores contractual and commercial reality,” stated Morgan, underscoring the contractual and commercial realities overlooked by the SEC.
The legal arguments extend beyond the issue of disgorgement. Both Ripple and the SEC are involved in extensive legal proceedings, including the submission of various legal briefs and motions that address multiple aspects of the case.
The focus currently includes procedural matters, particularly regarding the sealing of sensitive information tied to the court’s decisions on the remedies proposed in the lawsuit.
The decisions made in this case will likely influence future regulatory actions within the U.S. cryptocurrency market. The court’s rulings on the allocation of disgorgement funds and the broader legal interpretations applied in this case could set precedents for how similar cases are handled in the future.
