Ripple (XRP) Case: SEC May Appeal the Judgment Despite the Reduction in Penalties

The U.S. Securities and Exchange Commission (SEC) has chimed into the final judgment in the Ripple case, emphasizing that the court recognized the

The U.S. Securities and Exchange Commission (SEC) may still have some cards up its sleeve in the Ripple case, despite the final judgment.

The agency chimed in on the matter, highlighting that the court recognized the “egregiousness” of Ripple’s conduct, the SEC told Fox Business reporter Eleanor Terrett. District Judge Analisa Torres ruled that Ripple had committed serious securities law violations and ordered the company to pay a $125 million fine. While the SEC had sought a much larger penalty of $2 billion, the final amount was significantly reduced.

However, the story might not be over yet. Here's a closer look at what the SEC could do next.

SEC's Stance and Possible Appeal

Despite the reduction in penalties, the SEC may still consider appealing certain aspects of the case. While the agency is unlikely to challenge the recent order on remedies, it could take issue with the July 2023 summary judgment ruling, which classified secondary XRP sales as non-securities.

This distinction is crucial, as it determines whether XRP can be freely traded without being subject to SEC registration. The SEC had argued that all XRP sales, both primary and secondary, constitute an investment contract and are therefore securities.

By concluding that secondary XRP sales are not securities, the court effectively narrowed the scope of the SEC's authority over the digital asset. If the SEC decides to appeal this aspect of the ruling, it would set the stage for a higher court to weigh in on the legal definition of a security in the context of cryptocurrencies.

Ripple's Perspective and Market Reaction

While Ripple has framed the final judgment as a significant win, Terrett reveals that the fine was higher than the $10 million the company had hoped for. Even Marc Fagel highlights that the court's penalty for Ripple was significantly higher than what Ripple argued for. Specifically, Ripple believed the appropriate penalty was much lower, but the court imposed a fine that was 1150% higher than Ripple's suggested amount.

Despite this, Ripple seems to be celebrating the partial victory, as the court's ruling on secondary XRP sales could have major implications for the crypto industry at large.

The XRP price also reacted positively to the news, surging by over 20% in just 24 hours. In South Korea, XRP even outpaced the daily trading volumes of major cryptocurrencies like Bitcoin, Ethereum, and Solana.

Is it Over Yet?

It remains uncertain whether Ripple's legal battle with the SEC is truly over, as the agency might still appeal the recent ruling. Crypto legal experts, including lawyer Preston Byrne, suggest that an appeal is likely, with Byrne noting he hadn't anticipated Ripple's initial win.

However, Ripple's expansion into non-U.S. jurisdictions in recent years could lessen the impact of any potential new restrictions on its American operations if the SEC decides to appeal.

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