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Ripple v. SEC: $1 Billion Question About Potential Fine

Sun, 07/16/2023 - 18:55
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Alex Dovbnya
Ripple, the company behind the cryptocurrency XRP, faces potential fines of up to $1 billion following its legal dispute with the Securities and Exchange Commission (SEC)
Ripple v. SEC: $1 Billion Question About Potential Fine
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In a series of tweets by Fox Business's Charles Gasparino, he posed some questions regarding the potential $1 billion fine Ripple may face following the recent legal dispute with the Securities and Exchange Commission (SEC).

The question, reflecting the company's potential to cover the significant sum, revolves around whether Ripple would utilize their available $1 billion cash reserves, or alternatively, dilute their holdings of XRP.

Gasparino highlights that analyst John E Deaton had predicted accurately the nature of the verdict. The initial sales of XRP were deemed illegal, clearly breaching the Howey Test -- a legal principle to determine whether a transaction can be classified as an "investment contract".

However, secondary market purchases of the XRP cryptocurrency didn't violate the law. The outcome of this trial may well result in Ripple CEO Brad Garlinghouse having to foot the bill.

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Despite a partial win for Ripple, Gasparino's pessimism is evident in his assessment of the potential for Ripple to maintain its success upon appeal. He also points out that Ripple will still have to pay fines for the part of the case they lost.

As reported by U.Today, the XRP price faced a sharp drop after an initial rally following the mixed verdict announcement. This price volatility underscores the ongoing uncertainty in the marketplace concerning Ripple's legal situation.

In addition to Gasparino's tweets, John Reed Stark, a legal analyst, has criticized the court's decision, suggesting potential flaws and a complicated distinction between private and programmatic sales of XRP.

Stark expressed concern over a new class of "quasi-securities" that change depending on the sophistication of the investor, deeming it unprecedented and inconsistent with the SEC case law.

The Ripple case is far from over, as the SEC will likely appeal the decision, and Stark predicts that the rulings related to programmatic and other sales will be overturned. 

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at