- Ripple CLO Stuart Alderoty has highlighted the SEC’s latest loss in court where a judge ruled that if a buyer doesn’t suffer financial loss, the SEC isn’t entitled to disgorgement from the defendant.
- The ruling could play a big role in Ripple’s ongoing battle with the agency, with some reports claiming Gary Gensler is seeking to push for up to $2 billion from the blockchain payments company.
The US Securities and Exchange Commission is relentless in its pursuit of crypto companies, with its latest target being the decentralized exchange Uniswap, as Crypto News Flash reported. However, the agency keeps losing, and as highlighted by Attorney Stuart Alderoty, its latest loss could become pertinent to how its lawsuit vs. Ripple gets settled.
Alderoty, the chief legal officer at Ripple, revealed recently that an appellate court had ruled against the SEC, upholding an earlier ruling against the agency.
The case stretches back to last November when the Court for the Second Circuit ruled in the SEC vs. Govil case that “the SEC can’t ask for a crippling disgorgement award without first proving that “investors” suffered actual financial harm. In other words, no harm, no foul.”
The agency appealed the ruling at the US Court of Appeals for the Second Circuit, but as Alderoty revealed, the upper court has denied the appeal.
Alderoty noted:
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.
SEC Keeps Losing—Will it Impact the Ripple/XRP Case?
Under Gary Gensler, the SEC has kept pushing against crypto companies, taking a handful to court while dozens of others chose to settle for millions of dollars. Some of its targets who have settled include crypto lenders Genesis and BlockFi and exchanges Kraken and BitMEX, who collectively forked out $251 million to the agency.
Coinbase and Ripple remain the two prominent crypto firms that have chosen to face the SEC head-on in court and make a case for the rest of crypto.
But while he has won some battles, Gensler’s losses against crypto have been piling up. The most prominent is with the Bitcoin spot ETFs—after several months of rejecting the financial instruments, Grayscale took Gensler to court and he lost. Today, over $28.7 billion has been directed to these ETFs.
Even in the Ripple case, the SEC has lost some significant battles, although the war is still ongoing.
With every loss, the SEC’s authority, approach, and leadership are questioned. Lawmakers, investors, and the general public are increasingly becoming open to what the crypto community has been saying the entire time: that we need new regulations for the crypto industry and that the SEC’s regulation-by-enforcement approach just isn’t cutting it.
Meanwhile, XRP is trading just below $0.5, losing over 8% in the past day and 17% in the past week amid a wider market downturn over the weekend.
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