Magistrate Judge Sarah Netburn has issued a new scheduling order in the years-long legal battle between Ripple Labs and the United States Securities and Exchange Commission.
Judge Netburn’s recent nomination as District Judge in the Southern District of New York has not impacted her role in the Ripple vs. SEC case, where she has continued to preside with a reputation for fair rulings. This is viewed as a positive sign by the crypto community, considering her history of rulings in this case.
SEC’s Last Date To Respond
After Judge Netburn was nominated to preside over the Ripple vs SEC case, the respected pro-crypto judge granted an extension for the SEC to file their rebuttal to Ripple’s motion until April 29, 2024.
Following this, Ripple will have three business days to respond.
This order is crucial as it addresses Ripple’s motion to dismiss the SEC’s recent expert submissions, which seek to strengthen the SEC’s case for remedies and a final judgment.
Ripple maintains its rigid stance against the SEC overstepping its legal boundaries.
The Current Arguments in Ripple vs SEC Case
Ripple had contested the SEC’s proposed civil penalties, suggesting a settlement of $10 million instead of the $2bn sought by the SEC. Ripple argues that the SEC’s claims are overstated and not supported by sufficient evidence.
Additionally, Ripple has challenged the SEC’s basis for disgorgement, arguing that there is no substantial evidence of financial harm resulting from Ripple’s actions.
To support their stance, the defendants have also cited the Govil case which highlights the lack of evidence for future violations or reckless behaviour in its institutional XRP sales. Ripple argues that legitimate business expenses should be deducted from any disgorgement calculations.
A key point in Ripple’s defence has been the argument that its On-Demand Liquidity (ODL) sales do not constitute investment contracts, as alleged by the SEC. Customers hold XRP for only a few seconds to facilitate cross-border payments, indicating that the primary use of ODL is for transactional purposes, not investment.
Ripple’s case rests on the claim that XRP is not intended to be an investment vehicle. This argument is central to refuting the SEC’s classification of XRP as a security.
By maintaining its arguments that the SEC has not proven reckless behaviour or a high probability of future violations, Ripple aims to discredit the SEC’s demand for disgorgement and large civil penalties.
Overall…
The Ripple vs. SEC case continues to be a significant legal battle with implications for the broader cryptocurrency industry. Judge Netburn’s recent order and Ripple’s defense arguments highlight this high-stakes litigation’s ongoing complexities and nuances.