The United States Securities and Exchange Commission (SEC) has submitted its final response in the ongoing lawsuit against Ripple.
In its filing, the commission rebuffed Ripple’s assertions that it acted responsibly in managing the XRP cryptocurrency.
The SEC emphasized that the court had previously rejected Ripple’s defense of “fair notice,” despite Ripple’s argument that there was no widespread uncertainty surrounding XRP’s legal status.
Moreover, the SEC highlighted Ripple’s efforts to downplay its liability by citing its collaboration with regulatory bodies since XRP’s initial coin offering in 2013. However, the SEC argued that Ripple’s compliance does not guarantee immunity from future violations.
The filing also criticized Ripple’s claims about restructuring future XRP sales and adhering to legal advice, contending that Ripple had misinterpreted court orders and underestimated their compliance requirements.
Additionally, the SEC dismissed Ripple’s defenses regarding XRP sales outside the U.S. and to accredited investors, noting that these arguments were not upheld during summary judgment.
Furthermore, the commission rejected Ripple’s revisions to contracts for on-demand liquidity sales, asserting that these amended contracts still lack necessary restrictions, thereby perpetuating legal risks.
Ultimately, the SEC maintains that despite Ripple’s assurances and lack of recent violations, the potential for future breaches remains. Consequently, the SEC argues that injunctions are necessary to ensure Ripple’s compliance moving forward.
The SEC’s response was met with criticism from Ripple’s chief legal officer, Stuart Alderoty, who questioned the agency’s approach.
Alderoty suggested that the SEC’s actions could be perplexing for other financial regulators globally that have established or are developing regulatory frameworks for the cryptocurrency sector.
On April 23, Ripple contested the SEC’s proposed $1.95 billion penalty for institutional sales of XRP. While the SEC recommended $876 million for disgorgement, $198 million for prejudgment interest, and a civil penalty of $876 million, Ripple argued that the civil fine should not exceed $10 million.
Summary Review: The SEC’s final response to the XRP lawsuit highlights the ongoing legal battle between the regulatory agency and Ripple. The SEC has refuted Ripple’s claims of responsible conduct regarding XRP, emphasizing the potential for future breaches despite Ripple’s compliance efforts. This response underscores the complexity of regulatory issues surrounding cryptocurrencies and the challenges faced by companies operating in this space. Ripple’s chief legal officer has criticized the SEC’s approach, suggesting broader implications for global financial regulators. As the lawsuit continues, the outcome will likely have significant ramifications for both Ripple and the broader cryptocurrency industry.
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