In a recent exchange on a popular social media platform, a prominent attorney within the XRP community engaged in a lively discussion about the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple, the fintech company behind XRP. This dialogue offered valuable insights into the potential financial repercussions for Ripple, sparking intrigue among cryptocurrency enthusiasts and legal minds alike.

This conversation was initiated by fellow pro-XRP attorney John E. Deaton, who boldly asserted, “The people who’ve argued that the SEC got a 50-50 victory in the Ripple case are 100% wrong. It was more like 90-10 in Ripple’s favor. If Ripple ends up paying $20M or less, it’s a 99.9% legal victory.” These words set the stage for a captivating exchange that delved into the nuances of the SEC’s case against Ripple.

In his characteristic style, the attorney, known for his wit, humorously likened his legal musings to resolving a marital disagreement. He quipped, “I was in a small argument with my wife last night, which means, I am thinking about ‘damages’ this morning.” With this amusing introduction, he transitioned into a more serious discussion about the legal intricacies surrounding Ripple and the SEC’s claims.

The attorney began by clarifying the SEC’s ability to seek various forms of financial penalties, including disgorgement, penalties, and interest. Disgorgement, he explained, involves the removal of profits from rule violators, such as Ripple. The court identified approximately $770 million in inappropriate XRP sales to institutional investors as the basis for the SEC’s claims.

However, the attorney delved into several compelling arguments that could work in Ripple’s favor. Citing the SEC v. Liu case, he pointed out, “Disgorgement is an equitable remedy, which means that it should be ‘fair.’ And ‘fair’ in this context means that it should be the violator’s net profits, not gross.” This implies that Ripple might significantly reduce its liabilities by deducting legitimate business expenses from the total sales.

Further expanding on the definition of “victims” in the context of disgorgement, the attorney emphasized, “As was recently upheld in the 2nd DCA, the amount of disgorgement must be ‘awarded for victims.’ ‘Victims’ means individuals/entities who lost money on an investment.” He highlighted the unique situation where XRP’s value had risen during the litigation, suggesting that this could imply that XRP is not a security, a point of significant importance in the case.

Another key point raised was the jurisdictional reach of the SEC. The attorney pointed out that the SEC needs to prove a connection between the purchasers of XRP and the United States. Consequently, sales to foreign entities without any U.S. ties could potentially be exempt from the SEC’s claims. The attorney mused, “In other words, if Ripple sold XRP to a German investment company with no ties to the U.S., the SEC has no jurisdiction over that sale. The ‘nexus’ question will be interesting.”

From the SEC’s perspective, the attorney acknowledged, “The SEC will rely on case law, which says that it doesn’t have to prove the disgorgement damages with specificity. The SEC can provide the Court a ballpark estimate, and then the burden shifts to the Defendant to show otherwise.”

He also noted that the SEC might challenge the inclusion of certain expenses in Ripple’s profit calculations, particularly those related to legal violations. “These are the issues that the parties will be litigating in 2024,” the attorney argued, indicating the complex nature of the legal battle ahead.

Concluding his analysis, the attorney estimated that the $770 million figure might not be the final amount Ripple ends up paying. He stated, “In conclusion, $770 million is NOT going to be $770 million, but something much less.” In response to a community member’s query about the expected settlement figure, the attorney speculated, “There’s a lot of litigation and info still to come out, but if some of the numbers I’ve heard about are proven true – under $100 million.”

This engaging discussion sheds light on the potential scenarios and financial implications of the SEC vs. Ripple case, captivating the interest of both the XRP community and those curious about the fate of this fintech giant. As the legal battle unfolds, the cryptocurrency world eagerly awaits the final verdict, which could have far-reaching consequences for the entire market.