The legal battle between Ripple Labs and the Securities and Exchange Commission (SEC) continues, with a recent scheduling order issued by Magistrate Judge Sarah Netburn. This order pertains to Ripple’s motion to dismiss the SEC’s latest expert submissions to bolster their case for penalties and a final judgment.
Extension Granted for SEC Rebuttal
Judge Netburn granted the SEC an extension until April 29, 2024, to file their response to Ripple’s motion. Following the SEC’s rebuttal, Ripple will have three business days to submit their counter-arguments.
This update comes amidst Judge Netburn’s recent nomination as District Judge within the Southern District of New York. Encouragingly for the crypto community, she will continue to preside over the Ripple vs. SEC case, known for her history of fair rulings.
XRP Counters SEC’s Claims on Penalties and Disgorgement
Ripple has fiercely contested the SEC’s proposed hefty civil penalties. They argue against the SEC’s demands for a significant financial penalty, suggesting a maximum of $10 million instead. Ripple maintains that the SEC’s claims are overstated and lack sufficient evidence.
Furthermore, Ripple challenges the SEC’s assertions regarding potential future violations or reckless behaviour during their institutional XRP sales. They reference the Govil case as a legal precedent, arguing against the SEC’s request for the disgorgement of funds. Ripple contends that the SEC cannot demonstrate any financial harm caused by their XRP sales and insists on deducting legitimate business expenses.
Ripple’s Defense Hinges on ODL and Investment Contract Classification
Bill Morgan, Ripple’s lawyer, has consistently emphasized that Ripple On-Demand Liquidity (ODL) transactions do not constitute investment contracts. Over the past three years, he has meticulously argued that ODL sales function differently from traditional investments. According to Morgan, customers hold XRP for mere seconds to facilitate cross-border payments, not for investment purposes.
He further emphasizes that ODL is not designed to be an investment vehicle. This argument is central to Ripple’s defence against the SEC’s classification of XRP as a security. In conclusion, Ripple maintains that the SEC has failed to establish a likelihood of future violations or reckless disregard for the regulations surrounding their XRP sales. They additionally cite the Govil case to challenge the SEC’s disgorgement claims, asserting the absence of any evidence demonstrating financial harm.
The upcoming exchange of legal arguments between Ripple and the SEC will likely be crucial in determining the lawsuit’s outcome.
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