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The SEC noted that the court has recognized Ripple’s “willingness to push the boundaries” of the summary judgment order, indicating a likelihood of future violations.
The SEC-Ripple lawsuit came to its conclusion when District Judge Analisa Torres announced a $125 million payment settlement by Ripple to the US Securities and Exchange Commission (SEC) over the violation of securities laws for XRP sales to institutional players.
However, analysts suggested that the securities regulator may challenge the court’s decision on the programmatic sales. As reported by Fox Business journalist Eleanor Terret, a spokesperson from the US SEC provided a statement highlighting significant penalties for the company.
The court has currently granted SEC’s motion for remedies that include an injunction to prevent Ripple from committing further securities law violations. Furthermore, the civil penalties of $125 million actually exceed ten times the $10 million that Ripple deemed right.
The SEC noted that the court has recognized Ripple’s “willingness to push the boundaries” of the summary judgment order, indicating a likelihood of future violations. Furthermore, the SEC said that the court has addressed the “egregiousness of Ripple’s conduct”, while noting the company’s repeated violation of Section 5 is a serious offense.
Thus, the SEc noted that securities law violations will apply to firms offering and selling investment contracts irrespective of the labels or the technology used. Eleanor Terret notes that both sides reflect a sense of victory.
Meanwhile, the SEC is satisfied with the penalties being twelve times what Ripple proposed, and with the court’s agreement that Ripple violated securities laws.
🚨NEW: I reached out to the @SECGov for comment on the @Ripple ruling and a spokeswoman gave me this statement:
“The Court granted the SEC's motion for remedies including an injunction barring Ripple from committing additional violations of the securities laws and significant… https://t.co/TC2xk7pBD2
— Eleanor Terrett (@EleanorTerrett) August 8, 2024
Howey Test on XRP as a Security
One unresolved issue is whether a written contract is required under the Howey test to classify an asset as a security. Ripple’s defense argues that XRP cannot be considered a security without a written contract, a position the SEC is likely to challenge in its appeal.
Amid the broader market recovery, XRP staged a strong rally surging all the way from the low of $0.44 to hitting the weekly high of $0.65. However, along with the development in the SEC lawsuit, XRP would need an additional catalyst in the form of macro development.
