Ripple’s legal strategies, focusing on net profits and limiting the SEC’s jurisdiction, may significantly reduce the potential $770 million penalty in the ongoing lawsuit.
Attorney Jeremy Hogan recently highlighted potential strategies Ripple could employ to significantly decrease the potential $770 million penalty sought by the SEC.
On November 5, Hogan shared insights on social media about how Ripple might lower the damages claimed by the SEC.
Disgorgement Strategy: Ripple’s Potential Saving Grace
Hogan pointed out the difference between Ripple’s net profits and its total revenue when calculating “disgorgement,” which is the recovery of profits gained from alleged wrongdoing.
By focusing on net profits, Ripple could deduct legitimate business expenses, potentially reducing the penalty amount.
Hogan also noted that the SEC’s regulatory power is limited to the United States, suggesting that Ripple could narrow the SEC’s case and related fines by concentrating on XRP sales connected to U.S. transactions.
Legal Milestones and Ripple’s Defense
The SEC sued Ripple Labs in December 2020, claiming the company conducted an unregistered securities offering via XRP sales.
However, Judge Analisa Torres’s ruling that XRP is not a security in secondary market trades was a pivotal moment in the case.
This ruling, coupled with the dismissal of several charges against Ripple executives, has changed the course of the lawsuit.
Ripple’s legal team, led by Stuart Alderoty, has drawn attention to the Second Circuit’s decision in SEC v. Govil, which requires the SEC to prove actual financial harm to investors for substantial disgorgement.
Ripple argues that the degree of its liability may hinge on whether XRP investors have suffered losses.
Progress in the Case: Briefing Schedule Set
Judge Torres has ordered the SEC and Ripple to propose a joint briefing schedule concerning the institutional sales of XRP, indicating forward movement in the case.
This part of the lawsuit deals with allegations of federal securities law violations by Ripple, with a schedule due by November 9.
Ripple’s legal maneuvers reflect its ongoing fight against the SEC’s claims and highlight the avenues explored to mitigate the looming $770 million penalty.
The case continues to be closely watched by the crypto community for its implications on the industry’s regulatory landscape.
