The Securities and Exchange Commission (SEC) has recently submitted its remedies reply brief in the ongoing legal dispute with Ripple Labs, marking a crucial phase in the litigation. This filing, accompanied by supporting exhibits, stands as the final brief before Judge Torres delivers her remedies ruling.

Pro-XRP legal representative Bill Morgan provided a detailed analysis of the SEC’s final brief, shedding light on the intricacies of the legal arguments and the potential impact on Ripple and its operations. A key aspect of contention centers around the issue of financial harm to institutional investors of XRP.

The SEC maintains that financial harm should encompass not only direct losses but also missed opportunities for greater profits due to less favorable terms in the acquisition of XRP. Morgan articulated, “The SEC’s reply brief does not introduce any new aspects to the debate surrounding financial harm.” He expressed doubts about the possibility of disgorgement, stating, “I am skeptical that disgorgement will be ordered, but the outcome is not straightforward.”

Moreover, the SEC’s reply brief fervently advocates for a permanent injunction that would curtail Ripple’s future sales of XRP, particularly to its On-Demand Liquidity (ODL) clients. According to Morgan, “The SEC contends that an injunction should be granted because Ripple’s business is currently predominantly the sale of XRP to institutions.”

In addition, the SEC asserts that Ripple has relinquished several defenses it previously asserted, such as the extra-territoriality of its sales to accredited investors, particularly in relation to institutional transactions. The SEC interprets this as a strategic retreat by Ripple in the face of unfavorable legal analysis and precedents.

In response to the SEC’s filing, Ripple’s Chief Legal Officer, Stuart Alderoty, expressed strong dissent, criticizing the SEC for its approach and indicating that the end of the lawsuit could be in sight. Alderoty also raised concerns about the SEC’s attitude towards international regulatory frameworks, underlining a point of contention between the company and the SEC.

The financial implications are substantial. The SEC seeks fines and penalties amounting to around $2 billion, emphasizing the severity with which it views the alleged regulatory breaches. In contrast, Ripple proposes a maximum penalty of just $10 million, asserting that the SEC’s demands are disproportionately high compared to penalties imposed in similar cases.

Ripple contends that it has implemented significant changes to its XRP institutional sale practices to prevent future infractions, demonstrating its commitment to complying with regulatory standards while contesting what it perceives as excessive punitive measures. Furthermore, the company argues that it did not cause financial losses to institutional investors.

At the time of writing, XRP was trading at $0.5218, underscoring the ongoing financial significance of the outcome of this legal battle.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.