- The SEC has failed to identify actual “victims” in its damage filing, said James Murphy.
- Murphy added that there can be no disgorgement if there is no victim institution.
- The agency is seeking $2 billion from Ripple for violations of US securities laws
The United States Securities and Exchange Commission (SEC) has failed to identify a single “victim” in its damage claim that it filed in court while seeking $2 billion from American blockchain payments firm Ripple.
In an interview, Scott Melker, a prominent crypto investor, and Web3 and digital asset lawyer James Murphy, famously known as MetaLawMan on social media platform X, said that Ripple caught a “lucky break” when the Second Circuit Court of Appeals ruled at the end of 2023 that in order for there to be disgorgement, there have to be victims of the fraud who have suffered pecuniary damages.
Murphy noted that there have to be actual lawsuits from investors who lost money for the SEC to impose a fine on Ripple. While the regulator is seeking $2 billion from the fintech firm, the SEC has failed to identify a “single purchaser of XRP who lost money.”
The lawyer pointed out that the SEC mentioned in the filing that some institutions that purchased XRP from Ripple at discounts were “peculiarly harmed” because they got lesser discounts as compared to other batches of buyers.
“There have to be actual lawsuits and they do have to identify a single ‘victim’ institution that lost money in their deal because they bought all of this XRP at some significant discounts,” Murphy added.
Murphy concluded his interview while stating that the disgorgement is supposed to go to the victims of the violators and not the US Treasury. However, since the SEC has failed to identify a single victim institution, the “disgorgement goes away.”
While a penalty could still be imposed in the absence of disgorgement, a multi-million-dollar fine would not make sense, Murphy pointed out.
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