SEC Submits Conclusive Reply in Ripple XRP Lawsuit

The legal battle between Ripple Labs and the SEC reaches a critical point with the SEC filing its final response in the remedies phase of the lawsuit.

May 8, 2024 - 13:08
May 8, 2024 - 13:06
SEC Submits Conclusive Reply in Ripple XRP Lawsuit
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The Securities and Exchange Commission (SEC) argues that despite Ripple’s claims, injunctions are still necessary to prevent future violations. Ripple Labs and the SEC have reached a critical point in their legal battle, with the SEC filing its final response in the remedies phase of the lawsuit. In its recent rebuttal to the remedies brief, the SEC challenged Ripple’s assertion that it had acted without recklessness and that there should be no widespread uncertainty about XRP’s legal status, an argument previously rejected by the court.

The SEC also maintains its position on assessing the likelihood of Ripple engaging in similar actions in the future, despite no rule violations by Ripple since the start of the XRP lawsuit in 2020. As stated in the remedies brief, Ripple has attempted to diminish its accountability while highlighting its collaboration with the SEC since the launch of XRP's initial coin offering in 2013. The SEC stressed that, from a legal standpoint, the lack of violations after 2020 does not eliminate the possibility of future breaches.

The SEC argues that Ripple’s promises to change its behavior after the lawsuit don’t justify avoiding injunctions. The SEC contends that Ripple's claims about following legal advice and adjusting future XRP sales based on the court's order are misleading. The SEC’s response also challenges Ripple’s assertions regarding sales outside the U.S. and to accredited investors, as these arguments were dropped during the summary judgment phase.

Moreover, Ripple's claims about altering contracts for on-demand liquidity sales are refuted, given that these contracts did not initially contain particular restrictions deemed as violations. Ultimately, the SEC argues that Ripple’s arguments don’t remove the need for injunctions to prevent future violations.

In response to the SEC’s reply in the remedies brief, Ripple’s chief legal officer, Stuart Alderoty, commented on the SEC’s declining reputation. He noted that international financial regulators with robust crypto licensing frameworks might be surprised by the SEC’s approach.

Alderoty criticized the SEC for its inconsistent application of the law but expressed hope for resolving the XRP lawsuit. While the crypto community awaits the case's outcome, analysts anticipate a final ruling around September. Ripple plans to introduce XRPL enterprise solutions to the Japanese market through a partnership with Tokyo-based consulting firm HashKey DX.