The legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has taken an intriguing turn. Attorney Jeremy Hogan has suggested that Ripple might settle its $125 million penalty in XRP rather than cash, citing legal precedent that could support such an approach.
Ripple’s Legal Penalty and SEC Ruling
In August 2023, a federal judge ruled that Ripple violated securities laws by selling XRP to institutional investors without proper registration. As a result, the court imposed a $125 million fine and issued a permanent injunction to prevent similar violations. While Ripple has expressed its intent to comply with the ruling, the method of payment remains a topic of debate.
Hogan proposed that the SEC could allow Ripple to pay the fine in XRP instead of U.S. dollars. If accepted, this alternative payment method could provide a unique resolution to the long-standing legal dispute.
Legal Precedent and XRP as Payment
Hogan’s argument is based on an 1869 U.S. Supreme Court case, which permitted a debt to be settled in gold rather than cash. This precedent supports the idea that specific performance—fulfilling an obligation with an asset instead of money—could be legally viable.
If applied to Ripple’s case, the SEC and the U.S. Treasury might have a mechanism to accept XRP as payment. However, significant hurdles remain. The fine imposed on Ripple is a penalty, typically payable directly to the U.S. Treasury in cash. Unless the SEC agrees to an alternative payment structure, the idea may not gain traction.
U.S. Treasury’s Role in Digital Assets
The U.S. government’s treatment of digital assets is a crucial factor in this discussion. While Bitcoin has been classified as a long-term reserve asset under the Strategic Bitcoin Reserve, other cryptocurrencies like XRP, Cardano, and Solana fall under the U.S. Digital Asset Stockpile. This classification allows the Treasury to manage and liquidate these holdings at its discretion.
If Ripple were to pay its fine in XRP, the Treasury could either retain the assets or sell them on the open market. A large-scale sale of XRP could impact its price and market stability, adding another layer of complexity to the proposal.
Hogan’s perspective has sparked debate within the cryptocurrency community. The feasibility of Ripple settling its penalty in XRP remains uncertain, as it would require regulatory approval. However, if such a settlement were permitted, it could set a precedent for future cases involving digital assets.
Also Read: XRP Ledger Upgrade: Dynamic NFTs, Compliance Tools & Security Boost in Rippled 2.4.0
As the legal proceedings unfold, all eyes will be on Ripple’s next move. A decision to accept XRP as payment could reshape regulatory approaches to crypto penalties, but without SEC approval, it remains a speculative scenario.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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