As a seasoned researcher with over two decades of experience in financial law and cryptocurrency markets, I find myself intrigued by the latest developments between Ripple and the SEC. The $125 million fine is certainly a significant reduction from the initial demand, but the case remains unresolved as both parties have until early October to appeal.
TL;DR
- Ripple was ordered to pay a $125 million fine, significantly lower than the US SEC’s initial demand, with both parties able to contend until early October.
- Lawyer Bill Morgan now sees a reduced chance (45%-55%) of an appeal form the Commision, based on recent case developments and favorable views on Judge Torres’ ruling.
The Appeal Seems Less Likely?
The most recent significant event in the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) took place at the start of August. At this time, Judge Torres ordered Ripple to pay a $125 million penalty for breaching certain securities regulations.
Many industry players viewed this decision as a significant victory for the company, given that the regulatory body had originally proposed a fine of $2 billion. In fact, some went so far as to call it the final resolution of the legal dispute.
The legal proceedings continue as both parties have until October’s early days to file appeals. This move from Ripple would be unexpected given that the fine amounts to only a 6% difference from the regulator’s initial demand. Notably, CEO Brad Garlinghouse has expressed respect for the court’s decision, while CLO Stuart Alderoty has confirmed they will pay the $125 million penalty in cash directly from their reserves.
One person who initially thought there was an 80% chance of appeal coming from the SEC is the pro-XRP lawyer Bill Morgan. Recently, though, he lowered the figure to 45%-55% after observing the developments in other cases involving the watchdog and the crypto industry.
In a similar scenario, Judge Orrick in the Kraken vs. SEC lawsuit leaned more towards the methods used by Judges Jackson in the Binance case and Judge Torres, as opposed to Judge Rakoff’s approach in the Terraform case.
According to Morgan, the positive feedback on Judge Torres’ judgement in the Ripple summary judgment case from Judges Orrick (in the Kraken case) and Jackson (in the Binance case) should help alleviate concerns about the validity of her decision that have been raised by critics like Gasparino.
Previously this year, Charles Gasparino, a Senior Correspondent at FOX Business, suggested that Judge Torres’ evaluation in the Ripple vs. SEC lawsuit could potentially contain errors.
Morgan noted that Judge Orrick commended Torres’ decision as one that was “thoroughly based on the specific facts of the case and relied on comprehensive evidence gathered throughout the proceedings.”
In summary, Morgan pointed out that the SEC can effortlessly separate the Ripple case from others due to its unique focus on specific, self-contained facts.
He suggested that there might be reasons beyond legal ones that could lead to an appeal, and this was his conclusion.
What if There Is an Appeal?
One person who thinks the SEC might hold an advantage if the case proceeds to the Court of Appeals is Dennis Kelleher, a former senior staff member in the Senate.
“The likelihood that the U.S. Securities and Exchange Commission (SEC) will prevail on appeal is estimated to be 90%. The original ruling, which granted protection under securities laws to sophisticated investors rather than unsophisticated ones, appears to have misunderstood or misapplied 90 years of law. This is why all other judges have dismissed this argument, as stated in mid-August.”
Contrarily, Ripple’s leading attorney, Alderoty, believes the odds of the agency achieving a clear victory are relatively low. He bases this on his observation that the court overturns the initial decisions in fewer than 10% of the cases it reviews.
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2024-08-29 21:03