At the XRP process, The US Securities and Exchange Commission (SEC) has filed its request for relief and entry of final judgment against Ripple, proposing a set of penalties that include injunctive relief, disgorgement of profits, and a remarkable $2 billion in civil penalties today. But that’s not all, as the 210-page document contains some interesting statements and claims.
#XRPCommunity #SECGov v. #Curling #XRP O @SECGov filed his motion for appeals and entry of final judgment, his memorandum of law in support of that motion, and his “proposed” judgment.https://t.co/uPlpJ7Tmon
-James K. Filan 🇺🇸🇮🇪 (@FilanLaw) March 26, 2024
Does Ripple favor the selection of institutional investors?
One of the claims made in the SEC document and pointed out by XRP community attorney Bill Morgan was a key revelation that Ripple engaged in discriminatory pricing practices by offering substantial discounts on XRP tokens to a select group of institutional investors. This practice, the SEC alleges, created an unequal playing field, benefiting certain “favored” investors to the detriment of others.
XRP community advocate Bill Morgan provided a summary this aspect, highlighting the potential damage to Ripple’s position in the eyes of institutional investors. “The SEC summary is a potential problem for Ripple beyond this case. The SEC might argue that there were two groups of institutional sales investors (he calls them the favored and the disadvantaged) and Ripple offered one group significant discounts on the price of XRP relative to the other group that did not receive them,” Morgan noted via X (formerly Twitter).
He further delved into the SEC’s allegation that such practices harmed the “disadvantaged” group of investors to the tune of $480 million, a figure based on assumptions that Morgan suggests needs close examination. “Evidence of the causality of this alleged harm appears scant,” he added.
The SEC document goes on to argue that Ripple’s sales tactics, specifically discounted sales to certain investors, directly contributed to downward pressure on the global market. XRP market price. This point is not just a regulatory compliance issue, but also raises the specter of legal action by institutional investors who may feel aggrieved by not having access to the same discounts.
Morgan also addressed the ramifications of these shares being classified as investment contracts by the SEC, saying: “Because these sales to institutions were considered investment contracts, this means that this offering of discounts to some institutions but not others is the very Disclosure According to the SEC, this should have been done, and would have been done to institutions, if sales to institutions had been recorded.”
He further noted that these SEC statements are also not good for Ripple’s reputation. “I’m not sure this revelation is good for Ripple’s reputation with institutional investors,” Morgan noted.
Ripple CLO Alderoty responds
Ripple Chief Legal Officer Stuart Alderoty also published a broad response to the SEC filing via X, vehemently contesting the narrative presented by the regulator. Alderoty stated: “Our response will be presented next month, but as we have all seen time and time again, this is a regulator that trades in false, mischaracterized and misleading statements.”
He further attacked the SEC for its illegitimate reasoning, stating: “They stayed true to form here. Instead of faithfully enforcing the law, the SEC remains hell-bent on punishing and intimidating Ripple – and the industry at large. We trust that the Court will approach the reparation phase fairly.”
At press time, XRP was trading at $0.64365.
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