In the XRP lawsuit, the US Securities and Exchange Commission (SEC) filed its motion for remedies and entry of final judgment against Ripple, proposing a suite of penalties that includes injunctive relief, disgorgement of profits, and a notable $2 billion in civil penalties today. But that’s not the whole story as the 210-page document contains some interesting statements and assertions.
#XRPCommunity #SECGov v. #Ripple #XRP The @SECGov has filed its Motion for Remedies and Entry of Final Judgment, its Memorandum of Law in Support of that Motion, and its “Proposed” Judgment.https://t.co/uPlpJ7Tmon
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) March 26, 2024
Did Ripple Favor Select Institutional Investors?
One of the assertions made in the SEC document and pointed out by XRP community lawyer Bill Morgan was a key revelation that Ripple engaged in discriminatory pricing practices, offering substantial discounts on XRP tokens to a select group of institutional investors. This practice, the SEC alleges, created an uneven playing field, benefiting certain “favored” investors at the expense of others.
XRP community lawyer Bill Morgan provided a summary of this aspect, highlighting the potential damage to Ripple’s standing in the eyes of institutional investors. “The SEC’s brief is a possible problem for Ripple beyond this case. The SEC is able to argue that there were two groups of institutional sales investors (it calls them favored and unfavored) and Ripple offered one group significant discounts in XRP price over the other group that did not receive them,” Morgan noted via X (formerly Twitter).
He further delved into the SEC’s claim that such practices harmed the “unfavored” group of investors to the tune of $480 million, a figure based on assumptions that Morgan suggests need thorough examination. “The evidence of causation of this alleged harm seems thin,” he added.
The SEC’s filing goes on to argue that Ripple’s sales tactics, specifically the discounted sales to certain investors, directly contributed to downward pressure on the overall market price of XRP. This point is not just a matter of regulatory compliance but also raises the specter of legal action from those institutional investors who may feel aggrieved by not being privy to the same discounts.
Morgan also touched upon the ramifications of these actions being classified as investment contracts by the SEC, saying, “As these…
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