Confusion swirled around the Ripple vs. SEC lawsuit this week after rumours of a final pretrial conference were debunked by Ripple’s Chief Legal Officer, Stuart Alderoty.
The SEC originally filed suit against Ripple Labs, along with executives Brad Garlinghouse and Chris Larsen, in December 2020. The charges alleged Ripple sold XRP as an unregistered security, with the executives aiding and abetting the sales. However, the legal landscape shifted dramatically in July 2023. The court ruled that non-institutional sales of XRP did not constitute securities offerings, and an attempt by the SEC to appeal this decision was denied.
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Seeing some confusion on next steps with the SEC vs. Ripple case. To clarify – Ripple will file its response to the SEC’s request for penalties by April 22 and the SEC has until May 6 to reply. There is no final pretrial conference because the SEC dismissed the charges against… https://t.co/Jn5Pw5rM30
— Stuart Alderoty (@s_alderoty) April 16, 2024
This recent court victory for Ripple also impacted the need for a final pretrial conference. These conferences typically address outstanding issues before trial and explore settlement possibilities. The conference became irrelevant with the dismissal of charges against Garlinghouse and Larsen in late 202t.
Focus Shifts to Upcoming Deadlines and Potential Penalties
While the final pretrial conference is off the table, the case is far from over. The focus now shifts to upcoming deadlines related to potential penalties. On April 22nd, Ripple must respond to the SEC’s request for financial penalties for the alleged securities violations. The SEC is seeking a hefty $2 billion from Ripple.
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May 6th is another key date. The SEC has until then to respond to Ripple’s counterarguments regarding the penalties. These deadlines suggest the court is nearing a decision on the penalty issue, but it doesn’t necessarily signal the end of the lawsuit.
Settlement Rumors vs. SEC’s Continued Pursuit
Rumours of a settlement persist, but the SEC, under Chair Gary Gensler, has shown a strong stance on regulating cryptocurrency companies. Some speculate the SEC may still appeal the July 2023 ruling. However, the regulator’s ability to collect the full $2 billion has been significantly weakened.
A late 2023 court decision in the Govil case limited the SEC’s ability to demand excessive disgorgement penalties without proof of investor losses. The SEC’s appeal of this decision was denied, making it difficult for them to prove such losses in the Ripple case and potentially derailing the hefty fine.
The Ripple vs. SEC lawsuit remains a closely watched battle with significant implications for the cryptocurrency industry. While the final pretrial conference is no longer a factor, upcoming deadlines and ongoing legal arguments promise further developments in the coming weeks.