The XRP Army are eagerly awaiting the SEC’s response to the settlement, which has a deadline for submission today, and a redacted version by Wednesday, May 8. This may be the final court filing in the SEC v. Ripple case.
The SEC’s response is expected to come during the day today.
Following the filing of the response, Judge Analisa Torres will consider and decide on the penalty for violating US securities laws. In July 2023, Judge Torres ruled that Ripple violated Section 5 of the U.S. Securities Act by failing to register XRP as a security in sales to institutional investors.
In its opening document on the legal settlement, the SEC asked the courts to order Ripple to pay a staggering $876,308,712 in damages, a preliminary interest of $198,150,940, and a compensatory penalty of $876,308,712. Notably, the SEC also asked the court to ban Ripple from selling XRP to institutional investors.
However, Ripple argued in its dissenting opinion regarding this legal solution that a civil penalty should not exceed $10 million. Citing the three tiers of Section 20(d) of the Securities Act, Ripple stated that this should be a tier 1 case because the SEC has never accused Ripple of fraud, deception, or manipulation.
On April 22, Ripple filed a dissenting opinion regarding the US Securities and Exchange Commission (SEC) demanding a penalty of approximately $2 billion in the case.
The dissenting opinion also cited the dismissal of charges of reckless disregard for a regulatory environment against Chris Larsen and Brad Garlinghouse.
Judge Analisa Torres also has to decide whether Ripple continues to violate US securities laws after the complaint in December 2020. The SEC justified its request for a $2 billion penalty and injunction by arguing that Ripple continued to sell XRP to institutional investors. However, Ripple argued that XRP sales were made to accredited investors or through ODL contracts that avoid profit and loss.
There may be disappointment for investors who hoped that the court decision would end the SEC vs. Ripple adventure. The cryptocurrency community also expects the SEC to appeal the Programmatic Sale of XRP decision. In the decision dated July 2023, Judge Analisa Torres ruled that scheduled sales of XRP did not meet the third requirement of the Howey Test.
The SEC has to wait until the end of its lawsuit against Ripple to appeal the court decisions. However, the SEC demonstrated its intent by filing a provisional appeal in August 2023. The court rejected this request in October 2023, forcing the SEC to wait until the court decides on penalties for Ripple’s violation of US securities laws.
