SEC Delivers Decisive Final Response in Ripple XRP Legal Battle, Calls Stablecoin Unregistered

By Jody McDonald May 09, 2024 In Ripple, SEC, XRP
Vancouver, CANADA - Apr 30 2024 : Ripple logo seen in an iPhone screen on SEC (U.S. Securities and Exchange Commission)
  • The SEC has filed its final reply in the remediations stage of its case against Ripple, arguing the crypto firm should face permanent injunctions and fines of up to US$2 billion.
  • The regulator also referred to Ripple’s planned stablecoin as an “unregistered crypto asset” implying it will be used to further flout SEC regulations.
  • The XRP community was unimpressed with the filing, suggesting it was weak and failed to properly apply the law — a final ruling is expected by September.

The United States Securities and Exchange Commission (SEC) has filed its final reply in the remedies stage of its seemingly never-ending legal battle with crypto firm, Ripple. The regulator argued in its filing that Ripple should face huge fines of up to US$2 billion (AU$3 billion) and permanent injunctions to prevent it from selling unregistered securities again in the future.

The SEC also attacked Ripple’s plans to launch a native stablecoin on the XRP Ledger (XRPL), saying it’s an “unregistered crypto asset” that further demonstrates the need for injunctions to keep Ripple in check.

Related: Ripple CEO Discloses SEC’s Intent to Request $2 Billion Fine from Judge 

Ripple Needs To Be Made An Example, Says SEC

In its filing, the SEC essentially argued that Ripple’s primary business model since its inception in 2013 has been selling unregistered securities to institutional investors. The regulator also claims that without permanent injunctions to stop it, Ripple will simply continue flouting regulations and go on operating in exactly the same way.


For its part, Ripple has previously claimed that it has consistently sought guidance from the SEC since it launched and has acted without recklessness in its sales of XRP prior to the lawsuit and has changed the way sales are made post-lawsuit to comply with SEC regulations. 

Despite both the SEC and Ripple seeming to agree that the crypto firm hasn’t broken any rules since the start of the lawsuit in 2020, the SEC insists that doesn’t mean Ripple won’t start breaking the rules again in the future and must therefore face permanent injunctions.

The SEC also argued that Ripple needed to face huge fines in order to send a clear message to other crypto companies and incentivise stricter compliance with SEC regulations:

Given the nearly $1 billion Ripple gained violating Section 5, the multi-billion-dollar business it built selling XRP (accounting for the value of Ripple’s massive XRP holdings and its cash on hand), the ‘low’ penalty Ripple demands would be a ‘slap on the wrist’ that neither punishes nor deters.

United States Securities and Exchange Commission

The SEC’s filing also briefly mentioned Ripple’s planned XRP native stablecoin, referring to it as an “unregistered crypto asset” and implying it will be used by Ripple to get around the court’s ruling and continue selling unregistered securities.

Related: Ripple Announces Stablecoin Coming to XRP Ledger: Insights and Implications

XRP Army Not Impressed With SEC Reply

The response from Ripple supporters to the SEC’s filing could generally be described as unimpressed. Attorney and close observer of the SEC’s case against Ripple, Jeremy Hogan, posted on X that “I think the SEC went out with a whimper here”, and noted the regulator didn’t mention Ripple’s On-Demand Liquidity (ODL) service.

Ripple’s lead Chief Legal Officer, Stuart Alderoty, was scathing in his assessment, saying on X that the SEC was “failing to faithfully apply the law and trying to pull the wool over the Judge’s eyes.”

It’s not known exactly when the judge will make their final ruling in this case, but it’s widely expected to be handed down sometime between July and September of this year.

Jody McDonald

Jody McDonald

Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.

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