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Last week, the legal battle between Ripple and the United States Securities and Exchange Commission (SEC) progressed to trial, with many expecting a resolution soon. Attorney James K. Filan announced a new schedule from Magistrate Judge Sarah Netburn, targeting the motion for relief and final judgment. The SEC must respond by April 29 and Ripple has three business days to respond.
A crucial week for Ripple and SEC
Magistrate Judge Sarah Netburn set a timeline for the ongoing lawsuit between Ripple Labs and the Securities and Exchange Commission (SEC). This timeline is linked to Ripple's attempt to dismiss the SEC's latest expert evidence intended to support its arguments for sanctions and a final ruling. Judge Netburn granted the SEC an extension until April 29, 2024 to file its counterarguments to Ripple's motion. Ripple will then have three business days to respond.
This calendar update follows the recent appointment of Judge Netburn to the position of District Judge in the Southern District of New York. Despite her new role, she remains chair of the Ripple v. SEC case, where she stands out for her impartial decisions that are generally viewed positively by the crypto community.
“My understanding of XRP is that not only does it have monetary value, but it has utility, and that utility sets it apart from Bitcoin and ether,” the judge said in 2021 (according to attorney Jeremy Hogan ).
XRP has contested the SEC's request for substantial civil penalties. The blockchain payments company countered the SEC's request for a hefty fine, instead proposing a maximum penalty of $10 million. Ripple claims that the SEC's allegations are baseless and lack adequate evidence.
Here is the expected result
Ripple representative Bill Morgan has consistently argued over the past three years that Ripple's on-demand liquidity (ODL) sales do not constitute investment contracts. According to Morgan, the nature of ODL transactions is distinct from traditional investments. He points out that customers only use XRP for a few seconds to enable cross-border payments, rather than for investment purposes.
Ripple emphasizes that the SEC has proven no likelihood of future violations or reckless disregard in its XRP sales and cites the Govil case to challenge the SEC's disgorgement request, highlighting the lack of evidence of financial harm.
Hogan recently predicted that the trial could conclude by this summer, predicting a $100 million settlement:
“I think the judge will not order any restitution but will throw the SEC a bone by imposing a $100 million penalty on Ripple.”
Previously, the SEC demanded a $2 billion fine from Ripple, citing violations in some XRP sales. Ripple countered by saying that XRP should not be classified as a security, arguing that it falls outside the SEC's regulatory scope. The company's chief legal officer, Stuart Alderoty, presented several key reasons why the penalty should not exceed $10 million.
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