SEC, XRP, Voice of Crypto
The Ripple vs SEC case is not over yet. The part that dealt with the retail XRP sales was won by Ripple. However, for the institutional XRP sales, the SEC still pursues an active case against the company and its executives.
The court of Southern District of New York ruled in July 2023 that the retail sales of XRP by Ripple could not be termed as security as they do not fulfil the criteria laid down by the Howey Test.
However, the judge also ruled that this decision of the court would not be applicable for the institutional sales since institutions might have some expectation of profits. The judge decided to hold separate judicial proceedings for this matter and it was scheduled for February 2024.
Professor J.W. Verret who has been a well known critique of regulations discovered that the SEC's demand for penalty against Ripple were not only exaggerated but they were also much higher than similar cases in the past.
On an average the SEC demanded around 11% penalty which is imposed on the total value of the sales. This penalty had been $5 million for Kik Interactive whose sales were around $100 million. Another similar company, LBRY, was penalized for $111k based on $11 million worth of sales.
However, the SEC demanded much greater penalties in the case of crypto companies many of whom were asked to pay as much as 300% of sales.
The Open Network (TON) was asked to pay a whooping $1.24 billion (73%) in penalties for crypto sales worth $1.7 billion.
However, things went specially bad for Ripple as the researcher discovered that a fine of $1.95 billion was imposed which is 300% greater than the sales made. This is what made the researcher claim that the SEC was indeed abusing the power.
A Twitter user commented that for the entire 2008 Financial Crisis, the SEC settled for just 50% of what it has been asking Ripple to pay. The user said that the 2008 Financial crisis wiped $13 trillion and was responsible for 9 million job losses.
Another user questioned the basis of such high penalties asking if these huge fines were based on past settled cases or were just arbitrary numbers.
A user on Reddit claimed that the US govt has been trying to plunder as much money as possible from anyone they could think of so that they could justify their outrageous spending.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.