Ripple’s Chief Legal Officer, Stuart Alderoty, has highlighted a recent court ruling that could have significant implications for the company’s ongoing battle with the US Securities and Exchange Commission (SEC). In the ruling, a judge stated that the SEC is not entitled to disgorgement from a defendant if the buyer did not suffer any financial loss. This ruling could impact Ripple’s case, as there are reports that the SEC is seeking up to $2 billion from the blockchain payments company.
The SEC has been relentless in its pursuit of crypto companies, with its latest target being the decentralized exchange Uniswap. However, the agency has been consistently losing in court, and Alderoty believes that this latest loss could be relevant to the SEC’s lawsuit against Ripple.
Alderoty recently revealed that an appellate court had ruled against the SEC, upholding an earlier ruling against the agency. This case originated from a ruling in the SEC vs. Govil case last November, which stated that the SEC cannot seek a disgorgement award without proving that investors suffered actual financial harm. The SEC appealed this ruling, but the upper court has now denied the appeal.
Alderoty noted that the SEC continues to lose in court, and that the Second Circuit Court of Appeals has refused to reconsider their decision in the Govil case. This means that if a buyer does not suffer any financial loss, the SEC is not entitled to disgorgement from the seller.
This ongoing pattern of losses for the SEC could have implications for the Ripple/XRP case. Under the leadership of Gary Gensler, the SEC has been aggressively pursuing crypto companies, taking some to court while others have chosen to settle. Coinbase and Ripple are two prominent firms that have chosen to face the SEC in court.
However, Gensler has been facing numerous setbacks in his battles against the crypto industry. One notable loss was with Bitcoin spot ETFs, where Grayscale took Gensler to court after months of rejections, resulting in over $28.7 billion being directed to these ETFs.
Even in the Ripple case, the SEC has suffered significant losses, although the overall outcome is still uncertain. With each loss, the SEC’s authority, approach, and leadership are being called into question. There is a growing consensus among lawmakers, investors, and the general public that new regulations are needed for the crypto industry, and that the SEC’s current regulation-by-enforcement approach is inadequate.
Meanwhile, the price of XRP, Ripple’s digital asset, has been declining, trading just below $0.5 and experiencing losses of over 8% in the past day and 17% in the past week. This decline is part of a broader market downturn over the weekend.
In conclusion, Ripple’s ongoing battle with the SEC could be impacted by a recent court ruling that limits the SEC’s ability to seek disgorgement from defendants who did not cause financial harm to buyers. The SEC has been facing numerous losses in court, raising questions about its authority and approach to regulation. The crypto community is increasingly calling for new regulations for the industry. Meanwhile, XRP’s price has been declining amid a wider market downturn.