Ripple and the Securities and Exchange Commission (SEC) are heading towards a final judgment in their ongoing legal battle, as the SEC has filed a redacted remedies reply brief. This filing, along with supporting exhibits, could have significant implications for Ripple and other cryptocurrency entities.
The SEC’s argument centers around the likelihood of Ripple repeating its past actions. The SEC highlights the ongoing risk posed by Ripple’s unregistered sales of its XRP token, which have been the company’s primary business since 2013. Furthermore, Ripple’s plans to issue a new unregistered crypto asset further complicate its legal standing.
Court filings have clearly documented Ripple’s history of major unregistered dealings, including Over-the-Counter (OTC) Institutional Sales up to 2020. While there have been no new violations since 2020, the SEC argues that the nature of Ripple’s activities raises the possibility of future infractions, justifying the need for an injunction.
Ripple has presented counterarguments, claiming it has not acted recklessly and highlighting the uncertainty surrounding the legal status of XRP as a defense. However, the court has previously dismissed this defense, and similar arguments have failed in cases against other firms like Coinbase.
Ripple also emphasizes its voluntary cooperation with the SEC since 2013, suggesting that it should not be held fully liable. However, the SEC argues that cooperation does not negate the need for injunctive relief, as Ripple’s past behavior, including selling XRP as an investment against legal advice, indicates a pattern of disregard for regulatory compliance.
Ripple’s claims of making significant changes to prevent future violations are viewed skeptically by the SEC. The SEC argues that Ripple’s changes are insufficient and based on a mistaken understanding of legal guidelines on sales structuring.
Financial ramifications are also addressed in the filing, with the SEC refuting Ripple’s challenges to disgorgement of ill-gotten gains. The SEC states that Ripple’s failure to disclose certain financial terms has harmed institutional investors who could have paid less if they were fully informed about discounts and pricing strategies.