SEC Faces Setback in Govil Lawsuit, Ripple Stands to Benefit

The United States Securities and Exchange Commission (SEC) suffered a setback in its lawsuit against Aron Govil, and speculation on social media platform X suggests that Ripple, a blockchain payments firm, could benefit from the decision.

Stuart Alderoty, Ripple's Chief Legal Officer, highlighted that the Second Circuit Court of Appeals declined to reconsider its decision in the SEC vs. Govil case. This decision upholds the principle that the SEC is not entitled to disgorgement from sellers if buyers suffer no financial loss.

SEC's Disgorgement Demands: Ripple's Legal Strategy Amidst Govil Case Precedent

Last year, Alderoty emphasized that the SEC cannot demand crippling disgorgement without proving actual financial harm to investors. However, an Australian pro-crypto attorney weighed in, noting that while the SEC relies on Govil to justify disgorgement based on "ill-gotten gain" if investors suffer financial harm, Ripple could benefit if institutional investors experienced no such losses.

The SEC is seeking disgorgement of all institutional sales revenue from Ripple, totaling $991 million, while deducting revenue expenses of $115 million. If Ripple can demonstrate that institutional investors suffered no financial losses, the refusal of the Second Circuit Court of Appeals to reconsider Govil's case could work in its favor.

It's crucial to note that the SEC aims to impose $2 billion in fines and penalties on Ripple in a case devoid of fraud allegations, according to Ripple's CEO Brad Garlinghouse and Alderoty.

SEC's Govil Lawsuit Setback: Potential Ripple Effect in Legal Battle

The SEC's setback in the Govil lawsuit potentially benefits Ripple, as the ruling underscores the requirement for evidence of financial harm to demand disgorgement. This development could impact Ripple's ongoing legal battle with the SEC, where it faces hefty fines and penalties despite the absence of fraud allegations.