Ripple vs SEC: Decrypting SEC’s Damage Theory in XRP lawsuit, A Fortunate Turn for Ripple?

In a recent video update shared by crypto expert James Murphy and Wolf of Wall Street Scott Melker delves into the intricacies of the SEC’s damages theory in the Ripple case, highlighting what he sees as a fortunate turn of events for Ripple.

Decrypting SEC’s Damage Theory? 

As a result of a decision by the Second Circuit Court of Appeals, he brings up an important issue about a law precedent that says the SEC must show wrongdoing by identifying victims who have lost real money.

Melker sheds light on the SEC’s losses theory and points out a big problem: no XRP buyers can be identified as having lost money. Instead, the SEC’s case is based on the idea that some buyers bought XRP at lower prices, which is a claim that goes beyond the meaning of “pecuniary harm” without showing specific companies lost money.

By failing to identify clear victims who have suffered real financial losses, the SEC’s case weakens considerably. The principle of disgorgement, which aims to return illicit profits to those harmed, loses its footing without identifiable victims. This raises questions about the legitimacy of the $200 million interest claimed by the SEC, as it relies on the existence of discouraged buyers who have suffered financial harm.

SEC’s Penalty Is Question

Interestingly, Melker’s research makes it sound like Ripple may have had a lucky break in this court case. Since there is no proof of real harm, it would be hard for the court to show why the proposed $850 million penalty is fair. In securities lawsuits, this shows how important it is to show real financial harm. It also suggests that Ripple may have a better case than was thought before.

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Future Implications

Looking ahead, the SEC has demanded a whopping $2B which is unfair for many. While Ripple fights back, slamming the charges as an intimidation tactic and overreach. if the court sides with the SEC and imposes the $2 billion fine on Ripple, the company may need to sell around 3.22 billion XRP coins at the current market price of $0.62 per coin to raise the required funds.

However, Ripple could potentially tap into its reported $1 billion cash reserves to cover the penalty, as disclosed by CEO Brad Garlinghouse earlier this year, mitigating the immediate impact on XRP’s market dynamics.

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