According to a letter submitted to the court, the Securities and Exchange Commission (SEC) expects that the remedies phase will be lengthy and involve substantial litigation. Additionally, they are seeking further fact and expert analysis regarding disgorgement. These indications suggest that the regulatory body is not seeking a swift settlement; rather, they are preparing for an extensive investigation into Ripple’s institutional offers and sales.
In response, Ripple has outlined three key areas of focus in their letter to the court. Firstly, they plan to conduct additional fact-finding to determine which of Ripple’s offers and sales should be classified as institutional. Notably, they argue that the SEC may have gone beyond their jurisdiction by labeling all sales as institutional.
Secondly, Ripple presents a jurisdictional challenge. They argue that many transactions did not occur within the United States, thereby falling outside the SEC’s regulatory authority.
Lastly, the issue of post-complaint sales to On-Demand Liquidity (ODL) customers for cross-border payments is a significant point of contention. These sales primarily cater to sophisticated commercial entities and are executed within seconds, deviating from the standard characteristics of investment contracts.
According to Ripple, ODL transactions differ greatly from investment contracts as they do not align with traditional expectations of generating profits. The distinction between these transactions and institutional sales is not just theoretical; it involves a substantial amount of money, potentially surpassing what was initially stated in the SEC’s complaint.
Considering all these factors, reaching a settlement in this case may not be as straightforward as writing a check. Given the complexities and high stakes involved, it seems increasingly unlikely. As both parties brace themselves for the remedies phase, the outcome of this case remains uncertain. This uncertainty not only affects Ripple and its ODL clients but could also have a significant impact on the regulatory landscape for cryptocurrencies in the United States.