Hideo Nakamura The United States Securities and Exchange Commission (SEC) is reportedly seeking a substantial penalty of $770 million from Ripple Labs Inc., alleging violations of securities regulations. Prominent cryptocurrency attorney, John Deaton, expressed on social media platform X on Wednesday that the SEC’s robust demand comes in the wake of a series of legal setbacks the agency has faced against the digital currency company.
Table Of Contents
SEC Targets Ripple for $770 Million in Penalties
On a public social media forum, John Deaton elaborated that the SEC is demanding a $770 million fine from Ripple Labs for alleged infringements of securities legislation. This comes after the regulatory body experienced multiple legal defeats against Ripple. Just last week, the SEC rescinded its charges against Brad Garlinghouse, the CEO of Ripple, and its co-founder, Chris Larsen. Additionally, District Judge Analisa Torres earlier dismissed the SEC’s attempt to appeal her ruling on the XRP cryptocurrency. In Deaton’s view:
The SEC is angered and humiliated and is seeking $770 million as reparation.
Deaton went on to elucidate that the penalty phase of the case will necessitate further legal procedures, including but not limited to, more depositions, interrogatories, and requests for the production of documents, emails, bank statements, contracts, and on-demand liquidity transactions. “A final judgment from Judge Torres is unlikely before late summer at the earliest. It might take a full year for an appeal to even be filed in this matter,” he noted.
As a reference point, the attorney cited the SEC’s case against LBRY, a blockchain-based file-sharing and payment network. Initially, the SEC demanded $23 million but after eight additional months of litigation, the judge ultimately decided on a fine of $130,000.
Deaton also highlighted the ripple effect that the SEC’s ongoing lawsuit against cryptocurrency exchange Coinbase (Nasdaq: COIN) could have on Ripple’s case. If Coinbase succeeds in its motion to dismiss the SEC’s lawsuit, Deaton suggests that the SEC might have to reevaluate its stance on cryptocurrencies and potentially negotiate a settlement with Ripple. On the contrary, if Coinbase loses, he anticipates “no settlement” between the SEC and Ripple.
The attorney pointed out that the “oral arguments for the Coinbase motion are slated for January 17, 2024, with a judicial ruling likely to follow within 60 to 120 days.” He emphasized:
In the interim, it’s probable that Ripple will expend tens of millions in legal fees to significantly reduce the $770 million penalty.
Deaton concluded by affirming his belief that Ripple stands a good chance of considerably lowering the proposed $770 million fine. “This isn’t a case of fraud,” he stressed. “The objective is to arrive at a suitable penalty for Ripple for conducting transactions deemed to be sales of unregistered securities, albeit within the framework of an asset class that other federal agencies have categorized as ‘virtual currencies.'”
What are your thoughts on the SEC’s $770 million demand from Ripple? Feel free to share your opinions in the comments section below.
Frequently Asked Questions (FAQs) about SEC Ripple Lawsuit
What is the SEC demanding from Ripple Labs Inc.?
The U.S. Securities and Exchange Commission (SEC) is reportedly seeking a $770 million penalty from Ripple Labs Inc. for allegedly violating securities regulations.
Who is John Deaton and what has he said about the SEC’s actions?
John Deaton is a prominent cryptocurrency attorney. He has stated that the SEC’s robust demand for a $770 million penalty from Ripple comes after the regulatory body faced multiple legal setbacks against the company. Deaton describes the SEC as “angered and humiliated.”
What legal setbacks has the SEC experienced against Ripple?
The SEC recently dropped charges against Ripple’s CEO, Brad Garlinghouse, and its co-founder, Chris Larsen. Additionally, District Judge Analisa Torres rejected the SEC’s bid to appeal her previous ruling regarding Ripple’s XRP cryptocurrency.
What additional legal procedures will the penalty phase of the case involve?
The penalty phase will require further legal actions such as more depositions, interrogatories, and requests for the production of various documents, including emails, bank statements, and contracts. John Deaton anticipates that a final judgment from Judge Torres may not arrive until late summer at the earliest.
How might the SEC’s lawsuit against Coinbase affect Ripple’s case?
John Deaton suggests that if Coinbase succeeds in its motion to dismiss the SEC’s lawsuit, the SEC might reevaluate its stance on cryptocurrencies and potentially arrive at a settlement with Ripple. However, if Coinbase loses, Deaton predicts “no settlement” between the SEC and Ripple.
What is the expected timeline for the SEC’s lawsuit against Ripple?
The oral arguments for the motion to dismiss in the related Coinbase case are scheduled for January 17, 2024. A judicial ruling is expected to follow within 60 to 120 days after that. Deaton suggests that a final judgment in the SEC-Ripple case could take up to a year from now.
What is the significance of the SEC’s previous case against LBRY?
John Deaton cited the SEC’s case against LBRY as a point of reference. Initially, the SEC sought $23 million from LBRY, but after eight additional months of litigation, the judge issued a fine of just $130,000.
What are the financial implications for Ripple in terms of legal fees?
John Deaton anticipates that Ripple will likely spend tens of millions of dollars in legal fees fighting to significantly reduce the SEC’s proposed $770 million penalty.
Is this a fraud case against Ripple?
No, this is not a fraud case against Ripple. According to John Deaton, the objective is to determine an appropriate fine for Ripple for conducting transactions deemed as sales of unregistered securities.
More about SEC Ripple Lawsuit
- U.S. Securities and Exchange Commission (SEC)
- John Deaton’s Social Media Commentary
- Previous Ruling by District Judge Analisa Torres
- SEC’s Lawsuit Against Coinbase
- SEC’s Previous Case Against LBRY
- Cryptocurrency Regulations
- Overview of Ripple Labs Inc.
- Motion to Dismiss in Legal Terms
