Anika Begay
THE long legal battle between Ripple and the United States Securities and Exchange Commission (SEC) has ended (at least for now) following the recent ruling by Judge Analisa Torres awarding a $125 million fine to the cryptocurrency company. The verdict will have a huge impact on both sides, with both parties also scheduled to appeal.
What will happen to Ripple and the SEC?
Ripple will have to pay the SEC a $125 million fine for violating securities laws. This violation stems from the company selling XRP to institutional investors without first registering these transactions as investment contractsLast year, Judge Torres ruled that Ripple violated securities laws through its institutional sales, although he said XRP was not itself a security.
Based on the rulings, this case, which began in December 2020, is more of a victory for Ripple than for the SEC. Although Ripple will have to pay the SEC $125 million, the penalty is well below the $2 billion The Commission initially proposedRipple has proposed a $10 million penalty, but the cryptocurrency company will have no problem paying the $125 million.
During a interview with CNBC, Ripple Legal Officer (CLO) Stuart Alderoty stated that his company intends to pay the $125 million and continue with its operations as soon as possible. The court order requires Ripple to pay this fine within thirty days. However, Alderoty did not say exactly when the payment would be made, other than to confirm that it would be made from their balance sheet.
In addition to the $125 million fine, it is worth mentioning that Judge Torres also issued an injunction against future violations. Like the civil fine, this injunction is also considered simple and poses no problems for Ripple, as Alderoty described it as an “injunction to obey the law.”
Patrick Daugherty of Foley and Lardner highlighted how the injunction did not provide “real guidance” for Ripple since Judge Torres did not rule on whether Ripple violated securities laws with its On-Demand Liquidity Service (ODL)The judge said only that ODL’s service could come close to violating federal securities laws.
It is still possible to appeal
It is still possible to appeal, as both parties can do so within 60 days of the publication of the ruling. Ripple’s appeal likely borders on the ruling regarding its institutional sales, while the The SEC’s appeal borders on the ruling of Judge Torres on Ripple Secondary SalesAlderoty said Ripple has no plans to appeal, as he said the law firm believes Judge Torres’ recent ruling is final in the case.
Ripple CEO Brad Garlinghouse he also seemed satisfied with the verdict, based on an X (ex Twitter) send he later did, which he described as a “victory for Ripple, the industry and the rule of law.” On the other hand, the SEC Statement Following the ruling, it has been assumed that the Commission does not intend to appeal.
It is interesting to note that Alderoty mentioned that there should be no appeal if the SEC is a “rational actor” and if this administration is serious about hitting the “reset” button on cryptocurrencies. However, one lawyer who spoke to CoinDesk believes the Commission will appeal Judge Torres’ ruling that secondary sales are not investment contacts, which is a “bad precedent” for the regulator.
Featured image created with Dall.E, chart from Tradingview.com
