The long-running legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple, the blockchain company behind the XRP cryptocurrency, may soon reach a conclusion.
However, Ripple may not have to pay any substantial damages, as the court has set a schedule for the remedies phase that could favor the defendants.
The SEC filed a lawsuit against Ripple and two of its executives, Brad Garlinghouse and Christian Larsen, in December 2020, accusing them of raising over $1.3 billion through an unregistered securities offering of XRP.
The SEC claimed that XRP was a security and that Ripple failed to provide adequate disclosures to investors.
Ripple, on the other hand, argued that XRP was not a security, but a digital asset that was used for cross-border payments and other use cases.
Ripple also relied on the previous statements of an SEC director, who said that Bitcoin and Ethereum were not securities, to support its case.
The lawsuit has been closely watched by the cryptocurrency industry, as it could have far-reaching implications for the regulation and innovation of digital assets.
The outcome of the case could determine whether XRP and other cryptocurrencies are subject to the same rules and requirements as traditional securities, such as stocks and bonds.
However, the case may not end with a clear-cut verdict, as the court has set a timeline for the final phase of the litigation, which involves determining the appropriate remedies for the alleged violations.
According to Jeremy Hogan, an attorney close to the XRP community, the court has scheduled the final briefs for April 2024, which means that the final judgment will likely take place in July 2024.
Hogan also noted that the court has ordered the parties to meet and confer on a joint letter regarding the remedies by January 14, 2024.
Hogan explained that a permanent injunction would prevent Ripple from selling XRP in the future, which would effectively kill the cryptocurrency.
Disgorgement of profits would require Ripple to pay back the $1.3 billion it allegedly raised from the XRP sales, plus interest and penalties.
However, Hogan said that these remedies are unlikely, as the court has already found that XRP is not a security when sold to the public on an exchange, but only when sold to institutional investors.
Hogan said that the most likely outcome is that Ripple will have to pay a civil penalty, which could range from $5 million to $100 million, which will be a minor setback for Ripple as it has enough funds to cover the penalty and continue its operations.
Finally, he said that the lawsuit may have actually benefited Ripple, as it increased the awareness and adoption of XRP, which is now the third-largest cryptocurrency by market cap.
Therefore, Ripple may not have to pay any substantial damages as the lawsuit against it by the SEC gradually ends. Instead, Ripple may emerge as a stronger and more legitimate player in the cryptocurrency space, with a clear regulatory framework and a loyal fan base.