Ripple Labs vs. SEC: Scheduling Order Marks New Phase in XRP Battle

Magistrate Judge Sarah Netburn has taken the Ripple vs. SEC case in a new direction with a scheduling order.
Ripple Labs is pushing back against the SEC’s severe penalties and proposing a $10 million settlement.
In a recent development, Magistrate Judge Sarah Netburn, who has now become District Judge, issued a new scheduling order for the ongoing lawsuit between Ripple Labs and the SEC. According to a report by CNF, this order sets deadlines for the SEC to respond to Ripple’s motion to dismiss expert submissions by April 29, 2024. Ripple will then have three business days to respond. This is a crucial moment in the case, indicating heightened legal proceedings.
Ripple’s Position on Penalties and XRP Classification
As mentioned in today’s CNF YouTube update, Ripple Labs is challenging the SEC’s demand for significant civil penalties and instead suggesting a more reasonable fine of $10 million. Ripple argues that the SEC lacks evidence to support its claims and asserts that its On-Demand Liquidity (ODL) sales should not be classified as investment contracts. It maintains that ODL is primarily used for facilitating cross-border payments, which contradicts the SEC’s view of XRP as an investment. Ripple cites the Govil case to support its argument, stating that no financial harm or risk of future violations has been demonstrated.
Public and Legal Perspectives on ODL
A crucial aspect of Ripple’s defense revolves around the functionality of its ODL service. Ripple argues that ODL’s market sales are transactional, not investments, as XRP is held for only a few seconds to facilitate cross-border payments. This positions ODL as a tool for efficient transactions rather than an investment vehicle. Legal commentator James K Filan recently highlighted this in a tweet, sharing details about the ongoing legal maneuvers surrounding Ripple’s motion to strike new expert materials submitted by the SEC.
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Magistrate Judge Netburn has issued a scheduling order regarding @Ripple’s Motion to Strike new expert materials the SEC submitted in support of its Motion for Remedies and Entry of Final Judgment. It is below.
pic.twitter.com/BglOzE5pl4
— James K. Filan (@FilanLaw)
April 25, 2024
In discussions on social platforms like X, blockchain advocate Bill Morgan recently emphasized that ODL transactions should not be seen as investment contracts. He explained that ODL customers are essentially engaging in a quick exchange of XRP for fiat to carry out low-cost money transfers, not to invest in XRP.
Current Market Reaction
Amid these legal and regulatory discussions, the market performance of XRP has displayed resilience. Currently, XRP is trading at $0.5333, experiencing a 1.23% increase over the last day and a 10.24% increase over the past week. This upward trend reflects investors’ cautious optimism regarding the outcome of Ripple’s legal challenges.
These strategic legal defenses and Ripple’s unwavering stance against the SEC’s allegations play a crucial role in shaping the future of XRP and its classification within the broader scope of cryptocurrency regulations.