In the ongoing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), developments suggest that Judge Analisa Torres may likely deny the SEC’s motion for a $2 billion fine against Ripple. This conclusion arises from a series of arguments and legal precedents discussed in recent court filings.
SEC’s Disgorgement Strategy Questioned in Ripple Case
James Murphy, an attorney known for his support of Ripple and its digital asset XRP, has criticized the SEC’s latest legal moves in the case. In a recent post, Murphy highlighted the SEC’s reliance on a previous district court case, SEC v. iFresh, to prove “pecuniary harm”—a key factor in disgorgement cases. The case argued that harm was evident when a stock price was artificially inflated. However, Murphy contends that this reliance is misplaced given that the decision was marked “NOT FOR ELECTRONIC OR PRINT PUBLICATION,” indicating its weak precedence.
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The SEC has claimed that Ripple Labs manipulated the price of XRP, using methods including automated bots, which Ripple executives have consistently denied. The agency seeks $876 million in disgorgement, alleging financial harm to certain institutional investors who did not receive the expected discounts on XRP. Murphy argues that these claims do not hold substantial weight, referencing the Govil precedent which suggests disgorgement is not warranted without clear financial harm to buyers.
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Questioning the Use of Non-Precedential Decisions
Further complicating the SEC’s position is the procedural aspect concerning the citation of non-precedential decisions. Attorney Jeremy Hogan, echoing Murphy’s sentiment, noted that citing such decisions requires permission from the appellate court. This oversight could potentially weaken the SEC’s argument if not addressed properly in court.
The debate over the application of the iFresh decision underscores a significant legal challenge for the SEC. Judge Torres’s potential inclination to reject the SEC’s motion stems from these foundational issues in the SEC’s arguments. If Torres follows through with this lean, it could set a pivotal precedent for how pecuniary harm is evaluated in securities law, especially concerning digital assets.
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