XRP holders’ attorney John Deaton reiterates his belief that fintech company Ripple may not pay as much as $770 million in disgorgement, as some have speculated.
The SEC is seeking disgorgement for XRP sales in the United Kingdom, Japan, Switzerland and other parts of the world.
As I said on @CryptoLawUS, Ripple will not come close to paying $770M. Want to know how arrogant and broken the SEC is? The SEC seeks disgorgement related to #XRP sales in the U.K., Japan, Switzerland, etc.
Not only does the Supreme Court’s Morrison decision exclude those… https://t.co/SjqCmVlaPE
— John E Deaton (@JohnEDeaton1) November 10, 2023
Deaton goes on to explain why this will not happen in the Ripple case, noting the Supreme Court’s Morrison ruling, which specifically excludes such sales. Furthermore, XRP is regarded as a nonsecurity in the aforementioned nations, as well as in other jurisdictions.
According to Deaton, the FCA, the U.K.’s version of the SEC, assessed XRP to be an exchange or utility token rather than a security token. The same holds for Japan’s FSA, which indicates XRP as a nonsecurity.
The fact that selling XRP remains completely legal in these jurisdictions, according to their regulators, makes it difficult for the SEC to disgorge from these sales. Deaton believes that this is unlikely to happen. Also, the Ripple lawsuit is not a fraud case, so the goal of the court is not to punish Ripple.
The likelihood of a $770 million fine remains low since, after deducting non-U.S. sales (which could be greater than 90%), sales to accredited investors will also be deducted, leaving the SEC with the option of tying the disgorgement to investors who were harmed.
According to Deaton, many, if not all, of the previous institutional sales involved XRP at a lower price than it is at now, so there is no harm in this circumstance. Given the transaction period, which occurs in seconds, harm remains nonexistent in the case of ODL transactions.
For the 75,000 XRP holders who joined the lawsuit, accusations of harm are directed at the SEC rather than Ripple.
As reported, Deaton outlined a 99.9% win scenario, in which Ripple only needs to pay $20 million or less as disgorgement.
