In a recent turn of events, prominent XRP lawyers have convened on the X platform to deliberate the implications of a pivotal Second Circuit decision in the ongoing legal clash between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs. Stuart Alderoty, the Chief Legal Officer (CLO) at Ripple, drew attention to the SEC’s recent setback in its case against Aaron Govil. This defeat could have far-reaching ramifications for the SEC’s pursuit of Ripple.
The 2nd Circuit’s ruling in the Govil case laid a significant precedent, asserting that the SEC must provide conclusive evidence of genuine financial harm suffered by investors before it can request disgorgement from a defendant. This legal precedent has raised eyebrows in the XRP community, with many experts speculating that the SEC may face another setback in its battle against Ripple during the remedies stage.
SEC Faces Challenge In ‘Damages’ Phase
Jeremy Hogan, a prominent pro-XRP lawyer, pointed out that Alderoty’s remarks on the Govil case are particularly relevant since Ripple is currently embroiled in the ‘damages’ phase of the lawsuit. In this phase, the SEC is tasked with demonstrating that XRP holders incurred financial losses due to their investment in the cryptocurrency, a critical factor for establishing Ripple’s liability.
Hogan further elaborated on this point by noting that investors who purchased XRP at a price lower than its current value of $0.61 might not have experienced any financial harm, which could undermine the SEC’s case.
Amidst the rising tide of doubt, Attorney Bill Morgan has voiced concerns regarding the evidence available to support the assertion that XRP institutional investors endured financial losses. If Judge Analisa Torres presides over this case and extends the 2nd Circuit’s precedent set in the Govil case, the future of the Ripple lawsuit becomes progressively uncertain.
The SEC has faced multiple legal setbacks in its ongoing battle with Ripple, with Judge Torres ruling that XRP does not qualify as a security and rejecting the request for an interlocutory appeal. The upcoming remedies phase represents the next battleground in the subject lawsuit, where the court will determine the appropriate fines Ripple must pay for its alleged violation of the law in connection with the sale of $770 million worth of XRP to institutional investors.
There is no shortage of differing opinions on the potential outcome of the remedies phase. Some legal experts anticipate it would seek a substantial penalty from Ripple, attempting to extract a significant portion of the $770 million in XRP sales. On the other hand, some believe that Ripple would vigorously contest this, aiming to reduce the fine by excluding XRP sales related to On-Demand Liquidity (ODL) and other legitimate business expenses from the total amount.
As the legal battle between them continues to unfold, the cryptocurrency and financial communities are watching closely to see how the remedies phase will shape the future of this high-stakes litigation.