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In a significant development for Ripple and the broader cryptocurrency industry, the Second Circuit Court of Appeals has refused to reconsider its decision in the case of the SEC v. Govil, marking a continued series of losses for the U.S. Securities and Exchange Commission (SEC).
Stuart Alderoty, Ripple's Chief Legal Officer, highlights the SEC's run of defeats following the recent blow.
Alderoty underlines the significance of the most recent court ruling, which held that if a buyer suffers no financial loss, the SEC is not entitled to disgorgement from the seller. This viewpoint might be particularly relevant to Ripple's lawsuit, where the SEC has demanded a substantial sum - $2 billion in fines and penalties.
"The SEC continues to lose. The Second Circuit Court of Appeals refused to reconsider their decision in Govil, which held that if a buyer suffers no financial loss, the SEC is not entitled to disgorgement from the seller," Alderoty wrote.
The case of SEC v. Govil revolved around charges that Aron Govil made fraudulent securities offerings through his company, Cemtrex.
Last November, the SEC suffered a significant setback in the lawsuit when the 2nd Circuit ruled that the SEC could not seek a crippling disgorgement amount without first proving that "investors" suffered actual financial harm. In other words, no harm, no foul.
This development is regarded as a positive sign for Ripple's legal defense. The company could leverage the ruling to fortify its position against the SEC's demands.
Furthermore, the refusal of the Second Circuit Court to revisit its decision in Govil could have far-reaching consequences for the SEC's case against Ripple. Ripple could use this ruling to contest the SEC's claims regarding the disgorgement that it seeks.
Moving forward, the main dates to watch in the Ripple-SEC lawsuit are April 22, when Ripple will respond to the SEC on the $2 billion it seeks in penalties, and May 6, 2024.
Alex Dovbnya
