It goes without saying that the dispute between the United States Securities and Exchange Commission and Ripple Labs over whether XRP should be constituted as a security or not is one that will likely have consequences for the entire industry.
The case has been going on for many years now, and it’s currently in its trial phase.
Here are the most important developments as of late.
Trouble at the SEC?
As CryptoPotato recently reported, the Commission’s Chief of the Crypto Asset and Cyber Unit – David Hirsh – recently resigned.
Hirsh announced his resignation on LinkedIn. He had more than nine years of service for the SEC. He also denied rumors that he would be working for the crypto initiative called pump.fun, saying that he will be dedicating some time to his family before entering the new chapter of his career.
This happened days after the SEC lowered its demanded penalty from a whopping $2 billion to $102.6 million.
This came in response to Ripple’s legal team, which demanded a lowered penalty to the tune of no more than $10 million.
The SEC stated:
“Ripple avoids comparing the Terraform settlement’s penalty to the gross profit of the violative conduct. That ratio ($420 million/$3.587 billion) is significantly higher: 11.7%. Applying it to the $876.3 million in gross profits, the SEC here asks the court to disgorge, which results in a much larger figure, a $102.6 million penalty, than the $10 million ceiling Ripple insists on.”
Battling on Multiple Fronts
Ripple’s legal woes do not end with the case against the SEC. The company’s CEO, Brad Garlinghouse, is also involved in another lawsuit in California.
It has to do with the following statements that he made years ago:
“I’m long XRP, I’m very, very long XRP as a percentage of my personal balance sheet. . . . . [I am] not long on some of the other [digital] assets, because it is not clear to me what’s the real utility, what problem are they really solving . . . if you’re solving a real problem if it’s a scaled problem, then I think you have a huge opportunity to continue to grow that. We have been really fortunate obviously, I remain very, very, very long XRP, there is an expression in the industry HODL, instead of hold, it’s HODL . . . I’m on the HODL side.”
This case was allowed to proceed to trial, but the preceding judge dismissed multiple allegations, including those suggesting that Ripple violated federal securities law.
Ripple’s chief lawyer said:
The CA judge dismissed all allegations suggesting that Ripple violated federal securities law. The NY ruling that XRP is not a security stands undisturbed.
One state law claim, based on a 2017 statement, is going to trial. The plaintiff – who didn’t buy directly from Ripple and can’t say if he even heard the statement before he traded – allegedly lost a couple hundred $. We look forward to that cross examination.
Garlinghouse also reiterated that this was a big win for the company and that he stands behind the statements he made in 2017.
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