Jeremy Hogan, a legal expert, has dissected Ripple’s possible defense strategies that could dramatically decrease the staggering $770 million fine sought by the SEC. Using a social media platform on November 5, Hogan shared insights into how Ripple might mitigate the financial penalties proposed by the SEC.
Hogan highlights a key defense tactic involving the definition of “disgorgement,” suggesting that Ripple should calculate this based on net profits rather than gross revenue. This move could allow for the deduction of valid business expenses, significantly diminishing the sum Ripple would have to forfeit.
Moreover, Hogan points out that the SEC’s jurisdiction is geographically restricted to the U.S., proposing that Ripple could limit the penalties by proving certain XRP sales lacked sufficient connection to the United States.
The legal battle, which began with the SEC’s lawsuit against Ripple Labs in December 2020 over claims of conducting an unregistered securities offering via XRP sales, has seen various developments. A notable turn occurred when Judge Analisa Torres opined that XRP is not a security in secondary market trades, alongside the dismissal of some charges against Ripple executives, reshaping the case’s direction.
Citing the precedent of SEC v. Govil in the Second Circuit, Ripple’s chief lawyer, Stuart Alderoty, leans on the ruling that the SEC must prove actual investor losses to justify large disgorgement demands. This precedent bolsters Ripple’s stance that the degree of their liability could be contingent on whether XRP buyers experienced financial harm.
Judge Torres’s order marks recent progress in the lawsuit for a joint briefing schedule from both parties concerning XRP’s institutional sales by November 9. This development pertains to accusations of Ripple’s non-compliance with federal securities laws.
These legal strategies deployed by Ripple are illustrative of their rigorous defense against the SEC’s hefty penalty claims, underscoring Ripple’s vigorous efforts to curtail the potential financial impact. As the proceedings continue, the effectiveness of these legal arguments in the face of the SEC’s assertions remains a focal point for observers of the cryptocurrency legal space.