In the to punish. . But that’s not the whole story, as the 210-page document contains some interesting statements and claims.
#XRPCommunity #SECGov v. #Ripple #XRP The @SECGov has filed its request for remedies and the entry of final judgment, its memorandum of law in support of that request, and its “proposed” judgment.https://t.co/uPlpJ7Tmon
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) March 26, 2024
Has Ripple Favored Institutional Investors?
Among the allegations in the SEC document, which XRP community attorney Bill Morgan pointed out, was a major revelation that Ripple engaged in discriminatory pricing practices, offering significant discounts on XRP tokens to a select group of institutional investors. This practice, the SEC alleges, has created an uneven playing field, benefiting certain “favored” investors at the expense of others.
XRP community advocate Bill Morgan provided one resume of this aspect, highlighting the potential damage to Ripple’s position in the eyes of institutional investors. “The SEC’s order is a potential problem for Ripple outside of this case. The SEC can argue that there were two groups of institutional sales investors (it calls them favored and disfavored) and Ripple offered one group significant discounts on the XRP price versus 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 “disadvantaged” group of investors to the tune of $480 million, a figure based on assumptions that Morgan said should be thoroughly investigated. “The evidence of causation of these alleged harms appears thin,” he added.
The SEC filing goes on to argue that Ripple’s sales tactics, particularly its discounting of sales to certain investors, have directly contributed to downward pressure on XRP’s overall market price. This point is not only a matter of regulatory compliance, but also raises the specter of legal action from institutional investors who may feel aggrieved by not being aware of the same discounts.
Morgan also addressed the implications of these actions being classified as investment contracts by the SEC, saying: “Given that these sales to institutions turned out to be investment contracts, this means that this offering of rebates to some but not others institutions are correct, according to the SEC, this should have been done to the institutions, and would have been done, if the sales to institutions had been registered.”
He further noted that these claims from the SEC are also not good for Ripple’s reputation. “I’m not sure this revelation is good for Ripple’s reputation among institutional investors,” Morgan noted.
Ripple CLO Alderoty responds
Ripple’s Chief Legal Officer, Stuart Alderoty, too issued a broad response to the SEC’s filing via Alderoty stated: “Our response will be filed next month, but as we have all seen time and time again, this is a regulator that traffics in statements that are false, mischaracterized and intended to deceive.”
He further attacked the SEC for its illegal reasoning, saying, “They stayed true to form here. Instead of faithfully applying the law, the SEC remains determined to punish and intimidate Ripple – and the industry as a whole. We trust that the Court will approach the remedies phase fairly.”
At the time of writing, XRP was trading at $0.64365.
Featured image from Shutterstock, chart from TradingView.com
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