The United States States Securities and Exchange Commission (SEC) has filed its final response to its ongoing lawsuit against Ripple.
According to the filing, the commission has refuted Ripple’s claims that it acted without recklessness in handling the XRP cryptocurrency.
The regulator pointed out that the court had previously dismissed Ripple’s “fair notice” defense despite the firm’s assertion of no “widespread uncertainty” regarding XRP’s legal status.
Further, the SEC drew attention to Ripple’s attempts to minimize its liability by highlighting its cooperation with regulatory authorities since the initial coin offering of XRP in 2013. However, the regulator argued that Ripple’s compliance does not eliminate the possibility of future violations.
The filing went on to add that Ripple’s claims of restructuring future XRP sales and adhering to legal advice are misleading and do not accurately reflect the judicial orders. It asserted that Ripple had misinterpreted these orders and underestimated their compliance implications.
The SEC also dismissed Ripple’s defenses regarding XRP sales outside the U.S. and to accredited investors. The commission noted that these arguments were not sustained during summary judgment.
On top of this, the commission rejected Ripple’s adjustments to contracts for on-demand liquidity sales, pointing out that these revised contracts still lack necessary restrictions, hence continuing to pose legal risks.
Ultimately, the SEC maintains that, despite Ripple’s reassurances and absence of recent violations, the potential for future breaches exists. As such, it argues that this possibility justifies the need for injunctions to ensure Ripple’s compliance going forward.
The agency’s response wasn’t well received within the crypto community, with Ripple’s chief legal officer, Stuart Alderoty, criticizing its approach.
Per Alderoty, the SEC’s actions would be puzzling for other financial regulators that have established or are working on creating a regulatory framework for the crypto sector.
“If you are a financial regulator outside the U.S. and have done the hard work of establishing comprehensive crypto licensing frameworks, know that the SEC has no respect for you and thinks you are handing out the equivalent of fishing licenses,” he wrote.
On April 23, Ripple challenged the SEC’s $1.95 billion penalty imposed for the institutional sales of XRP. The regulator has proposed $876 million for disgorgement, $198 million for prejudgment interest, and a civil penalty of $876 million.
However, Ripple has claimed that the civil fine cannot exceed $10 million.