XRP News Today: Ripple’s Legal Woes Intensify with SEC’s Latest Court Filings

Ripple Penalty Hinged on Interpretation of Post-Complaint Activity

In April, Ripple contested the allegations of post-complaint breaches of US securities laws in its reply brief, stating that its counterparties qualify as accredited investors and that it limited post-complaint XRP sales to ODL sales. Ripple clarified that its ODL contracts protect buyers from losses and prevent them from earning profits.

The Howey Test states that an investment contract is the investment of money in a common enterprise, with a reasonable expectation of profits to be derived from the efforts of others. The ODL agreements prevent profits. Considering the ODL agreements, Ripple provided the court with arguments that post-complaint activity did not breach US securities laws.

Nevertheless, it will come down to the court’s interpretation of post-complaint activity. In a February court ruling on the SEC Motion to Compel, Judge Sarah Netburn surmised,

“The SEC credibly argues that the District Judge may consider post-complaint conduct when determining whether an injunction is necessary and just.”

In March, the SEC filed its remedies-related opening brief, presenting the courts with arguments for an almost $2 billion penalty and an injunction prohibiting XRP sales to institutional investors.

An injunction could materially affect Ripple’s expansion plans for the US.

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