The multi-year legal tussle between the U.S. SEC and Ripple is approaching a final resolution as the remedies stage of the lawsuit edges close to an end.
According to the court’s scheduling order, Ripple will file its reply to the SEC’s opening remedies-related brief today, April 22, 2024.
Procedures of Ripple’s Upcoming Opposition Brief
While Ripple is expected to submit its remedies-related opposition brief in the U.S. District Court for the Southern District of New York (SDNY) today, the filing will remain sealed until April 24, when a redacted version of the motion will be filed in the public docket.
After Ripple files its reply brief today, the parties will meet and confer tomorrow, April 23, to deliberate on necessary redactions before the filing goes public on April 24.
SEC Demands Stirs Reactions
The Crypto Basic reported last month that the SEC filed its opening remedies brief. Per the filing, the SEC requested that Ripple pay nearly $2 billion in fines and penalties for violating securities laws via its XRP institutional sales.
In addition to monetary demands, the SEC pleaded that the court impose sanctions to prevent Ripple from further violating securities laws. The SEC’s demand of nearly $2 billion came as a shock to several crypto enthusiasts, including Ripple CEO Brad Garlinghouse.
Garlinghouse noted that such a demand in a case devoid of fraud or recklessness allegations is unprecedented.
What to Expect in Ripple’s Brief
Interestingly, the Ripple CEO provided a hint of what the crypto community should expect in the opposition brief, noting that the company would expose the regulatory agency.
He added a gif to the tweet, which describes the SEC as an unserious agency for making such a hefty demand.
The SEC plans to ask the Judge for $2B in a case that involved no allegations (let alone findings) of fraud or recklessness. There is absolutely no precedent for this. We will continue to expose the SEC for what they are when we respond to this. pic.twitter.com/LdMQFQm70j
— Brad Garlinghouse (@bgarlinghouse) March 25, 2024
It is unclear how Ripple plans to oppose the SEC. However, speculations have emerged that Ripple could leverage the ruling issued by the Second Circuit in the SEC v. Govil case, which held that the SEC is entitled to disgorgement from the seller only when buyers suffer financial losses.
Should Ripple leverage the Govil ruling, the company could ask Judge Analisa Torres to impose disgorgement based on the Second Circuit decision.
If the judge agrees, she could mandate Ripple to pay disgorgement based on the number of institutional investors who incurred losses by purchasing XRP at prices above the current rate of $0.5351. However, legal experts have noted that this argument might not stand, as the SEC does not hold that Ripple’s sales resulted in losses.
Following the filing of Ripple’s opposition brief, the SEC would get a chance to file a reply by May 6. Afterward, Judge Torres would issue its final judgment, bringing the lawsuit to its final resolution at the district court level.
If any of the parties are unsatisfied with the final or summary judgment decisions, the lawsuit could proceed to the Second Circuit.
