SEC Files Final Redacted Remedies Brief Reply, Prominent Lawyers React

In the ongoing legal dispute with Ripple Labs, the Securities and Exchange Commission (SEC) has filed its remedies reply brief and accompanying documents. This file, which is the last brief before Judge Torres issues her remedy finding, represents a turning point in the dispute.

SEC Issues Final Reply

Although the court had previously rejected the “fair notice” defense, the SEC contested Ripple’s assertion that the blockchain firm operated responsibly and that there should be no “widespread uncertainty” regarding the legal status of XRP in its most recent remedy brief response. Even though Ripple has not broken any laws since the XRP case was started in 2020, the SEC continues to stand by its position regarding whether or not the company will probably do similar acts in the future.

The SEC clarified that a defendant’s disclaimer of intent to break the law in the future or their decision to stop their illegal acts had no bearing on the possibility of injunctive relief. This stance is based on the specific types of offenses committed, implying that even in cases when the offender makes a vow to abstain from future violations or ceases their illegal actions, there is still a chance for more offenses.

“Ripple’s “assurances” that its unregistered sales “avoid the problems identified” in the Order are based on misreading or ignoring what the Order says. Ripple’s first “assurance” is not even an actual assurance—it is instead another attempt to relitigate summary judgment arguments,” the SEC wrote in its reply.

Additionally, the reply disproves Ripple’s claims that sales were made to accredited investors outside of the United States. Ripple’s claims of contract modifications for on-demand liquidity sales are rejected because the contracts in question already did not contain some of the limits that were found to be in breach.

Pro XRP Lawyer and Ripple CLO Reacts to the SEC Final Reply

Meanwhile, the crypto community has reacted to the recent filing from the regulatory watchdog. Two prominent members of the community, pro-XRP lawyer, Bill Morgan, and Ripple’s Chief Legal Officer Stuart Alderoty have broken down the reply.

In Alderoty’s reaction, he implies that the SEC has played itself in its final response, informing other financial regulators outside the United States that the SEC “has no respect” for them, asserting that the SEC views their effort as “handing out the equivalent of fishing licenses.”

And just when you think the SEC can’t sink any lower, if you are a financial regulator outside the U.S. and have done the hard work of establishing comprehensive crypto licensing frameworks, know that the SEC has no respect for you and thinks you are handing out the equivalent of… pic.twitter.com/7qZQIkyrH4

— Stuart Alderoty (@s_alderoty) May 7, 2024

On the other hand, Bill Morgan stressed that the SEC did not add anything new to its argument about financial harm. According to him, the question is whether an institutional buyer who makes a profit but could have pursued better terms and made a bigger profit is still considered to have suffered financial harm. He points out that the regulators are looking for a “broad definition of pecuniary harm” while implying that the blockchain company Ripple “narrowly interprets financial harm.” He closed his financial harm argument by expressing his skepticism on the possibility of a disgorgement. ” “I do not think disgorgement will be ordered but the outcome is not obvious,” he said.