The U.S. Securities and Exchange Commission (SEC) reportedly wants Ripple to pay a $770 million penalty for violating securities laws. Crypto lawyer John Deaton explained that the securities regulator is “pissed and embarrassed” after it lost several legal battles against the crypto firm.
SEC Wants $770M From Ripple
Crypto lawyer John Deaton detailed on social media platform X Wednesday that the U.S. Securities and Exchange Commission (SEC) is demanding a $770 million penalty from Ripple for violating securities laws.
The SEC is pursuing this penalty after losing several legal battles against Ripple. Last week, the regulator dropped charges against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. Earlier this month, District Judge Analisa Torres rejected the agency’s bid to appeal her ruling regarding XRP. Deaton opined:
The SEC is pissed and embarrassed and wants $770M worth of flesh.
“What people need to understand is that the penalty phase is like a second case requiring more depositions, interrogatories, requests for production of documents, emails, bank statements, contracts, ODL [on-demand liquidity] transactions, etc.,” he explained. “I don’t expect a final judgment, issued by Judge Torres, until late summer, at the earliest. It literally could take a full year before an appeal is filed in this case.”
The lawyer cited the case of LBRY, a blockchain-based file-sharing and payment network, in which the SEC initially sought $23 million from the company. He pointed out: “It took eight months of additional litigation before the judge ultimately issued a fine of $130K.”
Deaton also anticipates that the outcome of the SEC’s lawsuit against cryptocurrency exchange Coinbase (Nasdaq: COIN) will impact the final amount that Ripple will have to pay the regulatory body. He believes that if Coinbase wins its motion-to-dismiss (MTD) the SEC’s lawsuit, then “the SEC will be forced to pivot its anti-crypto agenda and then work out a possible settlement with Ripple.” However, he predicts “no settlement” if Coinbase loses its MTD.
Noting that the “oral argument on the Coinbase motion” is scheduled for Jan. 17, 2024, he said: “A ruling is likely 60-120 days later.” The lawyer emphasized:
Until then I think Ripple will spend tens of millions of dollars in legal fees fighting to greatly reduce the $770M.
Deaton further stated that he believes Ripple will be successful in drastically reducing the $770 million penalty figure. “This isn’t a fraud case,” he stressed. “The goal is to reach an appropriate fine against Ripple for engaging in transactions that qualified as the sale of unregistered securities, but sold in the context of a new asset that other federal agencies declared ‘virtual currencies.'”
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