Judge Analisa Torres ruled on Wednesday that Ripple Labs must pay a $125 million civil penalty, substantially less than the $2 billion sought by the Securities and Exchange Commission (SEC) for alleged improper sales of XRP tokens, as reported by Bitcoinist. While the court proceedings at district court level have thus come to an end, higher courts could continue to deal with the case if one party decides to appeal.
Pro-XRP Lawyers Disagree On Ripple Appeal
Ripple’s CEO, Brad Garlinghouse, reacted positively to the decision, highlighting the stark difference between the SEC’s initial demand and the final penalty imposed. Via X, he stated “The SEC asked for $2B, and the Court reduced their demand by ~94%, recognizing that they had overplayed their hand. We respect the Court’s decision and have clarity to continue growing our company. This is a victory for Ripple, the industry, and the rule of law.
Stuart Alderoty, Chief Legal Officer (CLO) of Ripple expressed a similar view. He also indicates that his company is satisfied with the ruling. “The Court rejects the SEC’s suggestion that Ripple acted recklessly and she reminds the SEC that this case did not involve any allegations of fraud or intentional wrongdoing, and no one suffered any financial harm. […] We respect the $125M fine the Court has imposed for certain historic sales to sophisticated third parties.”
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Fred Rispoli, an attorney from the pro-XRP community, interpreted Ripple’s official responses as a clear indication that the company will not pursue an appeal. “Translation: What happened in the past was ruled by the Court to be illegal. We are immensely confident our current business operation is not impacted by the injunction,” Rispoli explained via X.
Jeremy Hogan, another pro-XRP lawyer, detailed why Ripple would find the ruling satisfactory enough to forgo an appeal. He outlined several factors that mitigate the injunction’s impact on Ripple’s operations, particularly concerning international sales and regulatory exemptions available for domestic sales.
Ripple CAN sell XRP to Institutions as long as it sells it under an exemption to registration. […] I think Ripple WILL be able to use its ODL product – it will just have to be careful HOW it does it.” Hogan clarified.
However, not everyone agrees. Lawyer James “MetaLawMan” Murphy commented via X: “Judge Torres has issued her ruling on remedies in Ripple. $0 disgorgement as expect because no losses shown by the SEC. $125 million in civil penalty for securities violations in sales to institutions. Injunction restraining Ripple from further violations of Section 5 of the Securities Act. This is a small fraction of the damages the SEC was seeking in the case. My guess is both sides will appeal.” Pro-XRP lawyer Bill Morgan shares the same view. He responded “I agree. Both sides will likely appeal.”
Will The SEC Appeal?
The SEC has not issued a formal response to the ruling yet. The agency’s silence leaves room for speculation about its potential strategies moving forward. Tony Edward, host of the Thinking Crypto podcast, speculated on the broader implications for SEC Chair Gary Gensler, suggesting that political and narrative pressures might influence the decision to appeal.
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“I see some people are saying Gary Gensler will appeal the SEC vs Ripple ruling. You are missing the BIGGER picture here: Gary Gensler has lost the narrative. His lies and political agenda given to him by Elizabeth Warren are getting exposed. He is losing major court cases. […] Plus he is feeling political pressure – he called out by Donald Trump, Democrats are turning on him and Elizabeth Warren, and much more,” Edward commented via X.
Notably, in June, Kristina Littman, former head of the SEC’s Enforcement’s Cyber Unit, muled that the SEC might choose to accept the district court’s decision rather than risk an unfavorable outcome at a higher appellate level, as Bitcoinist reported. “I think there’s some speculation that the SEC might just let the Ripple opinion stay there as a district court opinion and not risk elevating it to a circuit level where they could potentially elicit bad law,” Littman noted during a conference on digital assets.
Both parties have a 60-day window to file an appeal following the court’s decision. Especially, the SEC’s next steps remain uncertain amidst discussions of a regulatory ‘reset’ within the Democratic Party concerning the crypto industry. Adding another layer of complexity, the deadline for filing an appeal falls in early October, just one month before the US elections.
At press time, XRP traded at $0.6038.
Featured image created with DALL.E, chart from TradingView.com