- A US court refused to reconsider its decision in the SEC vs. Govil case.
- As per Ripple’s legal chief, this will benefit the firm in the XRP lawsuit.
- The regulator seeks to extract $2 billion from Ripple in “fines and penalties.”
The United States Securities and Exchange Commission (SEC) took a loss in a lawsuit against Aron Govil, and according to the buzz on social media platform X (formerly known as Twitter), blockchain payments firm Ripple will reap the benefits from the decision.
As pointed out by Stuart Alderoty, the Chief Legal Officer at Ripple, the Second Circuit Court of Appeals refused to reconsider its decision in the SEC vs. Govil case, maintaining the fact that “if a buyer suffers no financial loss, the SEC is not entitled to disgorgement from the seller.”
Alderoty stated last year that “the SEC can’t ask for a crippling disgorgement” if it can’t prove that the investors suffered actual financial harm. On the other hand, an Australia-based pro-crypto attorney took to X to weigh in:
But the SEC relies on Govil as authority for the proposition that if investors suffer financial loss or pecuniary harm then disgorgement is measured by the “ill-gotten gain”. Although Govil helps Ripple if institutional investors suffered no pecuniary harm the SEC alleges investors did suffer pecuniary harm.
Morgan said that the SEC is claiming disgorgement of all institutional sales revenue of Ripple while subtracting the cost of revenue expenses related to these sales. The revenue expenses amount to $115 million, as per the SEC, while the sales are worth a whopping $991 million.
Of course if Ripple shows that no institutional investor suffered financial loss then the fact the Second Circuit Court of Appeals did not reconsider Govil is a good thing for Ripple, Morgan added.
It is important to note that the SEC seeks to extract $2 billion from Ripple in “fines and penalties” in a case that has no fraud allegations, as stated by chief executive Brad Garlinghouse and Alderoty.
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