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With the SEC seeking a $2 billion penalty against Ripple, Attorney Jeremy Hogan says the demand would require Ripple to sell lots of XRP and further suppress the coin’s price.
Several legal experts have commented on the SEC’s recently filed opening remedies brief in the ongoing Ripple lawsuit. Attorney Jeremy Hogan is the latest to comment on the development, ushering in a new twist.
Hogan Faults SEC’s $2B Demand
Hogan’s emphasis was on the SEC’s plea for final judgment, in which the regulatory agency asked the court to impose a $2 billion fine against Ripple for violating federal securities law through its institutional sales.
Reacting to the outrageous demand, Attorney Hogan criticized the SEC’s ineffective legal strategy against Ripple and highlighted concerns about its implications for XRP holders.
Hogan explained how the SEC’s demand of $2 billion would hurt the same retail investors the commission claims to protect. According to Hogan, should the court grant the SEC’s pleading for summary judgment, Ripple will be required to sell lots of XRP from its holdings.
Hogan noted that the action would cause the price of XRP to plunge heavily, thereby hurting retail investors.
How backward has the SEC got this?
It wants $2 billion from Ripple, which would require Ripple to sell a lot of XRP, causing the price to drop, hurting the retail holder (you).
It would then "disgorge" that money back to rich "institutional" holders.
Feel protected yet? pic.twitter.com/pjJPaH3wki
— Jeremy Hogan (@attorneyjeremy1) March 26, 2024
Investors Blame Ripple for XRP Price Suppression
It bears mentioning that XRP has underperformed recently compared to most of its peers. Despite having legal clarity, XRP only surged to around $0.74 earlier this month from the $0.6 level it has traded for several months.
In contrast, Bitcoin’s price skyrocketed from around $50K to a new all-time high of $73,737 in one month.
XRP investors have continued to express concerns about the coin’s slow growth compared to the broader market. They attribute XRP’s underperformance to price suppression caused by Ripple’s monthly sales.
For the uninitiated, Ripple sells large volumes of XRP monthly. Specifically, the company releases 1 billion XRP from its escrow accounts monthly. While it re-locks 800M XRP in escrow, it retains the remaining 200M XRP and sells them to ODL (on-demand liquidity) customers.
The funds generated from these sales cater to Ripple’s expenses, including defending the company against the SEC. However, despite the mounting allegations of price suppression, there is no concrete evidence that these sales are responsible for XRP’s underperformance.
Number of XRP Ripple Could Sell to Raise $2B
If the court sides with the SEC and imposes a $2 billion fine against Ripple, the company would be forced to sell more XRP to meet this obligation.
According to the SEC, Ripple held 45.77 billion XRP in escrow as of December 31, 2023. With XRP changing hands at $0.62, Ripple would need to sell 3,225,806,451 (3.22 billion) coins to raise $2 billion.
However, Ripple could likely pay this fine using some of its cash reserves. In January, Ripple CEO Brad Garlinghouse disclosed that the company holds $1 billion in cash reserves and $25 billion in crypto, including XRP.