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Highlights
- Ripple has filed an opposition to the SEC's demand of $2 billion in penalties.
- Pro-XRP lawyer Bill Morgan shed light on the situation and highlighted that ODL XRP sales can't be considered investment contracts.
- Ripple CEO Brad Garlinghouse sounded alarm of the implications of the SEC's "disastrous policies."
Pro-XRP lawyer Bill Morgan has made a compelling argument regarding Ripple’s On-Demand Liquidity (ODL) sales. Moreover, he emphasized that these ODL sales do not constitute investment contracts. Morgan’s assertion comes amidst Ripple Labs’ ongoing legal battle with the United States Securities and Exchange Commission (SEC) over the classification of XRP.
Ripple Vs SEC: Why Are ODL Sales Not Investment Contracts?
In a recent statement on X, Morgan stated, “I have argued for three years that ODL contracts are not investment contracts.” He highlighted Ripple’s stance that ODL sales differ from traditional investments as customers hold XRP for only a few seconds to facilitate cross-border payments. Furthermore, he underscored that the ODL isn’t used for investment purposes.
In addition, the lawyer added that Ripple’s contracts explicitly prevent customers from expecting or earning profits from XRP purchases. This statement comes after Ripple filed opposition to the SEC’s motion for remedies and entry of final judgment. While Ripple has agreed to pay a maximum penalty of $10 million, it refuses the SEC’s requested disgorgement of $876,308,712 and prejudgment interest of $198,150,940.
Ripple maintains that the SEC has not demonstrated a likelihood of future violations or reckless disregard for the law in institutional XRP sales. Moreover, Ripple cited the Govil case, arguing against disgorgement. They asserted that the SEC cannot prove pecuniary harm and that legitimate business expenses should be deducted.
In addition, Monica Long, the President of Ripple Labs, testified in favor of the blockchain firm. She noted that all the ODL customers of Ripple’s subsidiaries are based outside the U.S. Moreover, she highlighted that Ripple itself doesn’t have any ODL customers. This dismisses the SEC’s allegations related to XRP’ ODL use.
Also Read: Ripple Files Opposition, Agrees to Pay $10M In Penalty To US SEC
CEO Brad Garlinghouse Lashes Out At SEC
Ripple CEO Brad Garlinghouse expressed optimism over filing their opposition on the “same day that 2 SEC lawyers ‘resign’ for their (mis)conduct in the Debt Box case.” In addition, Garlinghouse warned of dire consequences of the SEC’s “disastrous policies.”
He stated, “The US will be picking up the pieces of the agency’s disastrous policies long after Gensler is gone.” Meanwhile, Ripple CLO Stuart Alderoty reaffirmed confidence in the Ripple vs SEC case. Moreover, expects Judge Torres to provide a fair ruling during the final remedies phase.
In a post on X, Alderoty wrote, “Our opposition to the SEC’s request for $2B in penalties for legacy institutional sales is now public. In a case that had no allegations (or findings) of recklessness or fraud, and in which Ripple won on significant issues, the SEC’s ask is just more evidence of its ongoing intimidation against all of crypto in the U.S.”
Also Read: Bitcoin Consensus Rules Questioned by Ripple CTO
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