The legal dispute between Ripple and the Securities and Exchange Commission (SEC) has been nothing short of dramatic and has attracted attention from the global crypto community. In the last four years, the lawsuit has reached different turning points, including rulings that were perceived as a victory for each party.
Particularly, XRP was declared as non-security in July 2023, but, Ripple was fined $125 million by the court for the institutional sales of the token, classifying it as an investment contract. Meanwhile, the question of a reduced fine or settlement was raised in a recent conversation with John Deaton, James Murphy (MetaLawMan), and Jeremy Hogan on Crypto Law where they shared insight about possible outcomes.
Read Also: Ripple Secures Partial Victory as Court Grants Motion for Final Judgment and Pauses Class Claims
Does Ripple Pay the $125 Million Penalty or Not?
Recently, there have been uncertainties surrounding the civil penalty imposed by the court on Ripple. This particularly stems from the fact that a new crypto-friendly administration led by Donald Trump will take over in 2025. Trump had promised in his campaign that removing Gensler from office would be one of the things he would do upon taking office. This could lead to many pending crypto cases being dismissed or settled.
John Deaton asked if would be possible in a situation like this to get a stay on the case considering the huge amount of money that has been spent already. Jeremy Hogan responded by saying that he doesn’t see a situation where the appellate court stays the case, noting that the bigger question would be if Ripple would pay the $125 million at all in a situation where Trump orders the dismissal of all the crypto cases. He also noted that it would be awkward if the SEC agreed to settle for a lesser fine, as it would cripple the judgment of the court.
“I think may be the bigger question is does ripple pay that $125 million because if Trump comes in and say get rid of these cases,” … “it’s gonna be awkward when you have a judgement from a trial level court judge saying $125 million and then the SEC comes in and accept less than that, it will just be an awkward thing to do,” he said
Ripple Has the Leverage to Pay Less than Agreed Amount
John Deaton moved on to ask MetaLawMan if he thought the SEC could settle for half the agreed amount. MetaLawMan noted that Ripple has the leverage to do so citing its cross-appeal that challenges the specifics of an “investment contract.” He compared Ripples XRP institutional sales to that of Howey selling oranges to wholesalers at a cheaper rate, and the wholesalers reselling it to retailers at a higher amount.
He noted that even though there might be millions of dollars involved in the transaction, it is just a sale of commodity since the wholesalers did not really invest in the Howey business to get profit. Moreover, he added that Ripple could use this comparison to talk down the $125 million fine amount.
Ultimately, the next possible pivotal moment in the case could be in early 2025 when Trump takes office. His reaction toward the plethora of crypto cases could determine the next stage in the Ripple vs SEC lawsuit.
Read Also: Ripple vs SEC: Legal Expert Says There is no Such Thing as a $125 Million “Settlement Fee”
