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Ripple vs SEC: Ripple’s Fate in Judge’s Hands – What To Expect?

The legal battle between Ripple Labs Inc. and the U.S. Securities and Exchange Commission (SEC) has reached a critical juncture, marked by a significant filing from the regulatory agency. 

The SEC’s final remedies reply brief, along with supporting exhibits filed under seal, is expected to be publicly disclosed in a redacted form by May 8. This filing marks a crucial step as we await the judge’s decision on the matter.

What To Expect On Upcoming Ruling

The upcoming ruling will primarily focus on the SEC’s proposed remedies, which could include placing an injunction on specific Ripple sales, particularly those related to Institutional/ODL (On-Demand Liquidity) transactions. 

A key issue to be resolved is whether a ruling on Institutional sales would affect ODL transactions, potentially validating Ripple’s ODL operations going forward. 

Additionally, the ruling will determine penalties or disgorgement for the alleged securities violations. It’s also expected to clarify the status of post-complaint sales of XRP, specifically those involving ODL. The outcome of this ruling is uncertain, and legal experts are poised to provide insights into potential outcomes.

Questioning Over SEC’s Standing

The sentiment shared by observers questions the SEC’s chances of successfully appealing the summary judgment rulings they previously lost. Notably, the court determined that three out of four types of XRP sales did not qualify as investment contracts under the Howey Test.

  • Algorithmic sales of XRP on digital asset trading platforms (Programmatic Sales)
  • XRP distributions to Ripple employees and third parties (Other Distributions)
  • Sales of XRP by executives Brad Garlinghouse and Chris Larsen on various digital asset trading platforms

The court’s summary judgment emphasized that XRP itself does not inherently meet the criteria of an investment contract. Although the SEC secured a victory concerning institutional sales, ODL transactions were included in the judgment.

Despite the court’s finding that XRP doesn’t meet the Howey requirements for an investment contract, the SEC won on institutional sales, which also included On-Demand Liquidity (ODL) transactions.

Crucial Dates Ahead

While, the SEC’s final remedies reply brief, along with supporting exhibits filed under seal, is expected to be publicly disclosed in redacted form by May 8. Subsequently, on May 13, parties will file omnibus letter motions to seal related materials.  

A week later, they are expected to submit letter briefs opposing the omnibus motions to seal. According to the official document, redacted versions of all documents will be filed within 14 days of the court’s rulings in the public.

Speculations on Penalties

Speculation surrounding the potential penalties suggests a relatively modest fine, likely less than $50 million, and potentially granting Ripple the green light to continue ODL sales.

However, Jeremy Hogan a well-known attorney, has expressed optimism about a potential resolution by this summer, suggesting a settlement agreement of around $100 million between Ripple and the SEC.

As of now, XRP’s price has responded positively to recent updates, briefly reaching $0.52 before experiencing a slight decline in the past 24 hours.  

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