- Top lawyer highlights 4 reasons why Ripple may still sell XRP to institutional investors.
- The ODL service has foreign jurisdiction insulation for Ripple to thrive.
Stakeholders of American blockchain payments firm Ripple Labs Inc. just breathed a major sigh of relief with Judge Analisa Torres’s latest ruling. The ruling mandated the payments company pay a $125 million fine and officially concluded the long-drawn legal battle with the United States Securities and Exchange Commission (SEC).
With the conclusion of this case, top lawyer Jeremy Hogan has explained to the community what the ruling means for some aspects of Ripple’s business. His focus hinges on the sales of XRP through the On-Demand Liquidity (ODL) product.
Can Ripple Sell XRP To Institutional Investors?
Recall the major contention in the lawsuit hinges on two basic considerations. These include the sales of XRP to retail investors and the sale to institutional or corporate buyers. While XRP was declared a non-security per an earlier ruling, the $125 million penalty is the remedy for Ripple’s coin sales to institutions.
I see lots of questions re what the injunction means for ODL sales. I don’t see it changing the status quo AT ALL, for the following reasons:
1. As Ripple has stated, the majority of its XRP and ODL sales are outside the U.S. jurisdiction and not subject to the ruling. Those… pic.twitter.com/3GimWEcp0c
— Jeremy Hogan (@attorneyjeremy1) August 7, 2024
Attorney Hogan sheds light on what this means for ODL Sales. He does not see the status quo changing. Backing up his position, Hogan said Ripple argued throughout the legal battle that the majority of its XRP and ODL sales took place outside of US legal or regulatory jurisdiction. This generally insulates the company from continuing its sales as it has always done despite the lawsuit.
Hogan noted that the firm can do so should Ripple choose to sell XRP. However, it must offer these sales under an “exemption to registration” provision. He pointed out that about 5 exemption options are available for Ripple to choose from, with 2 likely to fit into the company’s core motives.
Leveraging the Gray Areas In the Ruling
As Jeremy Hogan pointed out, Ripple may also sell XRP to institutions through the ODL service, as Judge Torres did not give the SEC the ODL language it prefers.
The SEC may file a complaint against Ripple Labs for selling XRP via ODL. However, Hogan said the SEC must present evidence to support this filing. Per Hogan, Ripple’s argument might serve SEC an instant loss as there is no expectation of profit as the XRP is held for a few seconds based on the operational modalities of ODL.
As we discussed earlier, the summary judgment in the Ripple versus SEC lawsuit came over a year ago. Hogan argued that this is a reasonable time for Ripple’s legal team to devise a way to sell XRP compliantly. Should the SEC file a contempt hearing, whether or not Ripple’s defense mechanism is functional will only be known.
The Epic XRP Rebound
According to our recent analysis, the days before this ruling pushed the demand for XRP back to pre-lawsuit levels. With the ruling, the price of XRP has increased by 19.57% in the past 24 hours to $0.6175.
With this price mark, the coin has completely pared off its losses over the past week with a 1.4% uptick. The general trader sentiment is also bullish, showcased by the trading volume. This metric is up by 272% to $5,516,807,550.
