In a recent analysis, crypto lawyers foresee an intensification, rather than a resolution, in the protracted legal duel between Ripple Labs and the U.S. Securities and Exchange Commission (SEC). Renowned attorney Bill Morgan, known for his astute insights, delved into the roadmap outlined in recent court filings for the remedies phase, anticipating a no-holds-barred clash between the parties.
Morgan expressed skepticism regarding the likelihood of a settlement amid the complex legal landscape. The SEC’s initial demand of over $1 billion in penalties has been amended to $770 million, yet Ripple aims to further slash this figure by excluding specific XRP sales to commercial clients.
In a message to the court, Ripple shed light on the contentious areas expected to take center stage. A crucial point of contention revolves around differentiating institutional sales from non-institutional ones, as highlighted by Morgan. This dispute is exacerbated by the substantial sums involved, particularly regarding post-complaint sales to On-Demand Liquidity (ODL) customers for cross-border payments. Morgan argued that these transactions don’t align with the definition of investment contracts, given that ODL clients aren’t investing in XRP for profit.
Ripple’s Jurisdiction And Settlement Ambiguities
Moreover, Morgan raised lingering questions about the SEC’s jurisdiction in institutional sales transactions, where many transactions lacked any U.S. connection. Attorney John Deaton, a close follower of the case, echoed Morgan’s assessment, stating that he doesn’t believe serious settlement talks have transpired. He underscored Ripple’s intent to significantly reduce the $770 million penalty by excluding ODL transactions and making cuts in various expenditures.
Drawing parallels to the LBRY case, Deaton underscored these legal proceedings’ painstaking and time-consuming nature. It took an additional eight months of litigation before a fine of $130,000 was ultimately imposed.
The remedies phase is anticipated to encompass substantial additional discovery and litigation, potentially stretching for months. Deaton foresees a final judgment by late summer 2023, with appeals potentially extending well into 2024.
The ongoing Coinbase lawsuit against the SEC could emerge as a pivotal factor. Deaton believes that if Coinbase succeeds in dismissing the case, the SEC might be compelled to adopt a more lenient stance towards crypto firms like Ripple. Until then, both sides brace themselves for a protracted courtroom skirmish.
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