Ripple’s Chief Legal Officer, Stuart Alderoty, has highlighted a significant setback for the U.S. Securities and Exchange Commission (SEC). In SEC v Govil, the 2nd Circuit ruled that the SEC cannot demand a substantial disgorgement award without first demonstrating that investors have suffered actual financial harm, essentially asserting “no harm, no foul.”
In response to this development, attorney John Deaton has weighed in on the Ripple case, arguing that those who suggest the SEC achieved a 50-50 victory are mistaken. According to Deaton, it was more of a 90-10 situation in favor of Ripple. He suggests that if Ripple ends up paying $20 million or less, it should be considered a 99.9% legal victory for the company.
Deaton stated on social media, “The people who’ve argued that the SEC got a 50-50 victory in the @Ripple case are wrong. It was more like 90-10 in Ripple’s favor. If Ripple ends up paying $20M or less it’s a 99.9% legal victory.”
Another prominent lawyer, Jeremy Hogan, pointed out that Alderoty’s emphasis on the Govil case is due to it being in the “damages” phase. In this phase, XRP holders must have incurred losses on their XRP holdings for Ripple to be held liable. Hogan also mentioned that if you purchased XRP at a price lower than its current value, you haven’t suffered damage from Ripple, at least not in this legal context.
Hogan further noted that Ripple is likely to argue that it is only responsible for a fraction of the $770 million in damages claimed by the SEC, suggesting a partial victory for both parties in the SEC vs. Ripple lawsuit.
To recap, Ripple achieved a partial victory in July when a judge ruled that Ripple’s sales of XRP on public exchanges were not illegal securities offerings. However, the judge also upheld the SEC’s claim that Ripple’s $728.9 million of XRP sales to hedge funds and sophisticated buyers violated the law. This results in a mixed outcome in the case. It’s worth noting that the SEC attempted to appeal the ruling, but the judge did not permit it.