In a recent discussion on Ripple litigation, attorney Jeremy Hogan predicts a reduction in the potential $770 million fine imposed by the SEC.
Hogan highlights several key points that Ripple should emphasize to minimize the damages sought by the SEC. First, he suggests that Ripple should base the “disgorgement” amount on its net earnings rather than the total amount. This approach would take into account company expenditures and potentially lead to a significantly reduced penalty.
Another point raised by Hogan is the “nexus” concern. He points out that the SEC is only responsible for sales with a U.S. nexus, which raises questions about the geographical limitations of any financial penalties and further restricts their scope.
SEC Faces a Losing Streak
“Another loss this week for the SEC – the streak continues. The 2nd Circuit in SEC v Govil held that the SEC can’t ask for a crippling disgorgement award without first proving that ‘investors’ suffered actual financial harm. In other words, no harm, no foul.” – Stuart Alderoty
Stuart Alderoty, Chief Legal Officer of Ripple, references the 2nd Circuit’s decision in SEC v. Govil as precedent and suggests that Ripple’s accountability could depend on whether XRP investors suffered significant financial harm. He notes 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
“This is significant. The SEC can’t ask Ripple to pay $770 million in penalty for institutional sales if no harm has been inflicted on investors. The SEC has to see the writing on the wall and realize that it will not penalize Ripple drastically through attempting to charge huge…” – Yassin Mobarak
In response, Yassin Mobarak argues that, given no harm to investors, the SEC cannot justify a $770 million fine for Ripple’s institutional XRP sales breach. According to Mobarak, it is clear that the SEC lacks grounds to impose such substantial fines on Ripple when no investor harm has been demonstrated.
He emphasizes, “The SEC can’t demand a $770 million penalty from Ripple for institutional sales without proof of investor harm.”
Hot Take: Potential Reduction in SEC’s Fine Poses Significant Win for Ripple
Attorney Jeremy Hogan predicts a significant reduction in the potential $770 million fine imposed by the SEC on Ripple. By emphasizing key points such as basing the “disgorgement” amount on net earnings and highlighting the geographical limitations of financial penalties, Ripple could potentially minimize damages sought by the SEC. Recent decisions, including those from the 2nd Circuit and Fifth Circuit, indicate a potential losing streak for the SEC. This suggests that Ripple may have a strong case in reducing its accountability and avoiding substantial fines. If Hogan’s prediction holds true, it would be a significant win for Ripple in its ongoing legal battle with the SEC.
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