In what seems like an endless legal battle, the SEC vs Ripple case is far from over. Bill Morgan, an Australian lawyer, has illuminated the complexities and looming intricacies of the impending remedies phase of the case.
According to a letter sent to the court, the SEC anticipates that the remedies phase will be “protracted and heavily litigated.” Moreover, they are eyeing “additional fact and expert discovery on the issue of disgorgement.” This indicates that the regulatory body is not just looking for a quick settlement; they are gearing up for an exhaustive inquiry that deepens into Ripple’s institutional offers and sales.
Ripple’s Counterplay: Three Key Aspects
Not one to be left behind, Ripple outlined three focal points in their letter to the court. Firstly, they plan on further fact development to determine which Ripple offers and sales should be considered institutional. Notably, they argue that the SEC may have overstepped by labeling all sales as institutional.
Secondly, Ripple throws a jurisdictional curveball. They contend that many transactions did not touch U.S. soil, thus falling outside of the SEC’s jurisdiction.
Lastly, the issue of post-complaint sales to ODL (On-Demand Liquidity) customers for cross-border payments is a critical sticking point. These sales are particularly contentious as they primarily cater to sophisticated commercial entities and are completed within seconds—defying the standard characteristics of investment contracts.
In Ripple’s eyes, ODL transactions are far from investment contracts, as they don’t adhere to the traditional expectations of profit generation. The distinction between these and institutional sales is more than academic; it involves a substantial amount of money—potentially more than the SEC’s initial complaint referenced.
Settlement? Not So Fast
Bill Morgan’s tweet raises an important question: how could this case settle easily? Writing a check might sound like a simple resolution, but that route seems increasingly unlikely, given the complexities and high stakes involved.
With both parties digging their heels in for the remedies phase, the case’s resolution remains uncertain, affecting not just Ripple and its ODL clients but potentially rewriting the rules of engagement for cryptocurrencies in the U.S.