In a recent discussion on X, attorney Jeremy Hogan shed light on the Ripple litigation and the ongoing Ripple v. SEC case, predicting a significant reduction in the potential $770 million fine imposed by the SEC. If this prediction holds, it could be a significant win for the embattled business.
Hogan highlighted several vital points Ripple should emphasize to minimize the damages sought by the SEC, citing support from current case law and the specifics of Ripple’s XRP sales.
- Distinction in “Disgorgement” Basis: Hogan stressed that Ripple should base the “disgorgement” amount on its net earnings rather than the total amount. This approach would allow Ripple to account for company expenditures, potentially leading to a substantially reduced overall penalty.
- “Nexus” Concern: Hogan pointed out that the SEC is only responsible for sales with a U.S. nexus. This factor raises questions about the geographical limitations of any financial penalties, further restricting their scope.
SEC Faces a Losing Streak:
Stuart Alderoty, Chief Legal Officer of Ripple, also weighed in, referencing the 2nd Circuit’s decision in SEC v. Govil as precedent. He suggested that the extent of Ripple’s accountability could depend on whether XRP investors suffered significant financial harm, a crucial factor in determining the disgorgement amount. He noted that the SEC has faced multiple defeats recently, indicating a potential losing streak. Notably, the Fifth Circuit found that the SEC’s actions violated the Administrative Procedure Act (APA) due to arbitrariness and capriciousness.
Mobarak’s Perspective on the $770 Million Fine:
In response, Mobarak argued that, given no harm to investors, the SEC couldn’t justify a $770 million fine for Ripple’s institutional XRP sales breach. According to Mobarak, it’s clear that the SEC lacks grounds to impose such substantial fines on Ripple when no investor harm has been demonstrated.
He emphasized the significance of this aspect, stating, “The SEC can’t demand a $770 million penalty from Ripple for institutional sales without proof of investor harm.”
