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Ripple Can Sell to Institutions Despite Recent SEC Ruling

Published

1 month ago

August 8, 2024

On Wednesday, August 7, the U.S. Securities and Exchange Commission (SEC) slapped $125 million to Ripple in the ongoing SEC lawsuit for institutional sales to XRP and violating the securities laws. However, this has raised questions over the use of on-demand liquidity (ODL) sales that use XRP as a bridge for instant cross-border settlements.

Ripple Can Continue ODL Sales to Institutions

Clearing the air over the ODL sales that use XRP, attorney Jeremy Hogan said that this shouldn’t be a big issue “at all” moving ahead. the attorney added that a majority of Ripple’s ODL sales are outside the US jurisdictions and not subject to the SEC ruling.

Attorney Hogan noted that Ripple can still continue to use these ODL sales, however, it needs to be careful about how it does. Hogan pointed out five primary exemptions that would be easier to apply if the company is selling to businesses.

The attorney added that the judge didn’t provide with the On-Demand Liquidity (ODL) language it sought. This means that if the SEC believes that the blockchain startup violated the court order, it can file for another contempt and provide evidence for this violation. This would further allow the blockchain startup to argue there can be no exemptions in profit if the use of XRP is very brief during the ODL transactions.

Furthermore, Hogan emphasized that Ripple’s legal team has access to the summary judgment for over a year. He believes that the company has likely adjusted its XRP sales to ensure compliance. However, whether Ripple has “gotten too close to the line,” as the judge suggested, will only be determined if a contempt hearing occurs.

XRP lawyer Bill Morgan also apprecited the analysis from Attorney Hogan. He wrote:

“Having to fit ODL sales into an exemption or register sales are limitations on the possibility of very cheap global second long ODL transactions when the sales by their nature are not securities. The vision was for the instant transfer of value at virtually no cost as the internet allows the instant transfer of information. Why does a national regulator need to interfere with what the technology makes possible for the whole world.”

Also Read: Ripple Boosts UAE Crypto Adoption With Major Partnership

XRP Gains 20%

Hours after the SEC announced the penalty, the XRP community cheered as the actual penalty amount was much less that the $2 billion penalty demanded by the SEC. The XRP price has surged by a staggering 20% shooting past $0.60. Market analysts have now started talking about a possible XRP ETF going ahead.