In a recent development in the SEC v. Ripple case, Attorney John Deaton has suggested that Ripple may end up paying a fine lower than the $770 million initially speculated. The speculation arises in the aftermath of Judge Analisa Torres’ recent order outlining the schedule for the remedies phase of the lawsuit.
Judge Torres’ Latest Order
Judge Torres issued a crucial scheduling order this week, setting the timeline for the remedies phase. Both parties will finish remedies-related discovery by February 12, 2024. The SEC is planning to file its brief by March 13, 2024, and Ripple is expected to submit its opposition by April 12, 2024. The SEC has the option to file a reply by April 29, 2024. This phase will ultimately determine the fine Ripple must pay for its alleged violation involving the sale of $770 million worth of XRP to institutional clients.
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Factors That Could Mitigate Ripple’s Penalty
During a recent appearance on Crypto-Law, Attorney Deaton highlighted several factors that could lead to a reduced penalty for Ripple, deviating from the widely speculated $770 million fine.
Deaton pointed to the Supreme Court’s Morrison ruling as a legal precedent that might allow Ripple to exclude XRP institutional sales outside the United States. Ripple executives Brad Garlinghouse and Chris Larsen have asserted that a significant portion of their individual XRP sales occurred outside the U.S.
According to Deaton, this argument might apply to a substantial portion of Ripple’s XRP sales, potentially outside the SEC’s jurisdiction, thereby reducing the disgorgement amount.
Drawing on legal precedents, specifically, Liu v. SEC and SEC v. Govil, Deaton argued that disgorgement should be directed towards victims who suffered actual financial harm. In this context, Ripple might only be liable to pay disgorgement to XRP investors who bought the coin above its current price of $0.637. Deaton contended that many of Ripple’s institutional sales were below the current price.
Additionally, Deaton speculated that Ripple could seek to exclude legitimate business expenses, such as tax, legal, and travel fees, further lowering the potential disgorgement amount.
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Disgorgement Could Be Less Than Defense Costs
Notably, Attorney Deaton predicted that the eventual disgorgement fee for Ripple could be less than what the company has already spent on defending the SEC lawsuit. Ripple’s CEO, Brad Garlinghouse, had previously revealed that the company had expended over $150 million in legal fees up to that point. The actual amount remains uncertain as the case progresses into the remedies phase.
“Whatever the ultimate number [of the disgorgement] is, it will be less than what Ripple paid in attorney fees,” he predicted.
As the SEC v. Ripple case unfolds, the crypto community awaits the resolution of the remedies phase, where the ultimate fine imposed on Ripple will be determined.
