XRP News Today: SEC Wants $2 Billion in a No-Fraud Ripple Case

The Monday Overview

On Monday, XRP gained 1.23%. Following a 2.41% rise on Sunday, XRP closed the session at $0.6403.

SEC vs. Ripple: SEC Eyes a $2 Billion Ripple Penalty

On Monday, Ripple Chief Legal Officer Stuart Alderoty shared the latest from the ongoing SEC v Ripple case, saying,

“As you will see when the SEC’s brief is made public tomorrow, they ask the Judge for $2B in fines and penalties.”

In a series of posts on X (formerly Twitter), Alderoty went on to say,

“Our response will be filed next month, but as we all have seen time and again, this is a regulator that trades in statements that are false, mischaracterized and designed to mislead. They stayed true to form here. Rather than faithfully apply the law, the SEC remains bent on wanting to punish and intimidate Ripple – and the industry at large.”

Alderoty concluded,

“We trust the Court will approach the remedies phase fairly.”

The $2 billion request underscores the SEC stance on the Programmatic Sales of XRP ruling, which holds significant implications for the US digital asset space. In July 2023, Judge Analisa Torres ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test.

Ripple CEO Brad Garlinghouse responded to the Alderoty posts, saying,

“Gensler’s SEC has repeatedly acted outside the law – not going unnoticed by Judges admonishing the agency for a “gross abuse of the power entrusted to it by Congress” (DEBT Box case) and for acting without “faithful allegiance to the law” (Ripple case). Let’s not also forget Gensler’s lack of attention to SBFraud.”

Notably, XRP gave up more significant gains as investors reacted to the news. However, US case law establishes precedent and suggests a significantly lower penalty, with one caveat… If Ripple continued to breach Section 5 of the 1933 Securities Act after the complaint, the penalty could become punitive.

US Case Law and Post-Complaint Activity

On Monday, Brad Garlinghouse highlighted a significant point about the case and the SEC push for $2 billion, saying,

“The SEC plans to ask the Judge for $2B in a case that involved no allegations (let alone findings) of fraud or recklessness. There is absolutely no precedent for this. We will continue to expose the SEC for what they are when we respond to this.”

Ripple could cite case law to address the $2 billion claim. In SEC v Govil, the 2d Circuit court held that the SEC may not request a crippling disgorgement award without proving that investors suffered actual financial harm.

Other case law that may assist Ripple in bringing down the penalty to a reasonable amount include,

• Liu v SEC: A penalty must not exceed the wrongdoer’s net profits and must go to the victims.
• Morrison v NAB: The Supreme Court ruled that the SEC only has jurisdiction over US-based sales.

Amicus Curiae attorney John E. Deaton shared the respective case laws in November, predicting a sub-$150 million penalty.

While Ripple will likely cite case law to argue for a lower penalty, post-complaint activity is relevant. The SEC may pursue a punitive penalty if it can show that Ripple continued breaching the Securities Act after the complaint. In a February court order, Judge Sarah Netburn stated,

“The SEC credibly argues that the District Judge may consider post-complaint conduct when determining whether an injunction is necessary and just.”

Judge Netburn added,

“Courts have no hesitation in concluding that, in calculating the size of a penalty necessary to deter misconduct, the extent of a defendant’s wealth is a relevant consideration.”

The SEC must file a redacted version of the remedy-related opening brief by March 26. Ripple must file its opposition brief by April 22 and a redacted version by April 24.

XRP Price Action

Daily Chart

XRP remained above the 50-day and 200-day EMAs, affirming the bullish price signals.

An XRP break above the $0.6609 resistance level would support a move to the $0.70 handle. A return to the $0.70 handle could give the bulls a run at the $0.7467 resistance level.

SEC vs. Ripple case-related news and SEC-related activity need consideration.

Conversely, a fall through the $0.62 handle could give the bears a run at the 50-day EMA. A drop below the 50-day EMA would bring the 200-day EMA and the $0.5740 support level into play. Buying pressure could intensify at the $0.5740 support level. The 200-day EMA is confluent with the support level.

The 14-day RSI reading, 54.13, suggests an XRP return to the $0.70 handle before entering overbought territory.

4-Hourly Chart

On the 4-hourly, XRP hovered above the 50-day and 200-day EMAs. The EMAs confirmed the bullish price trends.

An XRP break above the $0.6609 resistance level would support a move toward the $0.7467 resistance level.

However, a fall through the 50-day EMA could give the bears a run at the 200-day EMA and the $0.60 handle.

The 4-hourly RSI, with a reading of 58.26, indicates an XRP move to the $0.70 handle before entering overbought territory.