Overview
The U.S. Securities and Exchange Commission (SEC) has submitted its concluding arguments in the lawsuit against Ripple Labs Inc., staunchly opposing the latter’s defense concerning the handling of cryptocurrency.
SEC Counters Ripple’s Defense
In a pivotal move, the SEC has dismissed Ripple’s claim that it acted without recklessness in its dealings with XRP. The regulator highlighted that the court had already negated Ripple’s “fair notice” defense, despite Ripple’s insistence that there was no significant uncertainty surrounding XRP’s legal classification.
Ripple’s Compliance Efforts Questioned
The SEC critiqued Ripple’s attempts to mitigate liability, underscoring its cooperation with regulatory bodies since XRP’s launch in 2013. However, the SEC argues that such compliance does not negate the potential for future infractions. It also contested Ripple’s portrayal of restructuring its XRP sales and adherence to legal counsel, labeling these claims as misleading and inaccurate reflections of judicial mandates.
International Sales and XRP Contract Adjustments
The regulator also rebutted Ripple’s defenses related to XRP sales outside the U.S. and to accredited investors, noting that these points did not hold during summary judgment. Additionally, the SEC criticized adjustments to contracts for on-demand liquidity sales by Ripple, pointing out the absence of necessary legal constraints.
SEC’s Stance and Crypto Community’s Reaction
Despite Ripple’s assurances and a lack of recent violations, the SEC asserts that the potential for future violations justifies the necessity for injunctions to ensure ongoing compliance. This stance has sparked criticism within the cryptocurrency community, particularly from Ripple’s chief legal officer, Stuart Alderoty, who questioned the SEC’s disregard for international regulatory frameworks.
Ripple’s Challenge to SEC’s Financial Penalties
On April 23, Ripple contested the SEC’s proposed penalties totaling $1.95 billion for institutional sales of XRP, arguing that any civil fines should not exceed $10 million, a stark contrast to the SEC’s demands for disgorgement and civil penalties.
