Over the weekend, Jeremy Hogan, an attorney and partner at Hogan & Hogan, offered his perspective on the SEC vs Ripple case. Hogan focused on the issue of disgorgement, as the SEC aims for a substantial $770 million penalty for the illicit sale of XRP to institutional investors.
Hogan emphasized that the law grants the SEC the authority to pursue disgorgement, interest, and penalties. The disgorgement matter arose in the wake of the court’s decision, which found that around $770 million in XRP sales to institutional investors were in violation of the law.
Hogan presented two different arguments. In the first, he said the SEC v. Liu case in 2020 established that disgorgement is an equitable remedy, implying that it should be just and equitable. In this context, fairness dictates that the disgorgement should represent the net profits resulting from the violations, rather than the gross profits. Therefore, Ripple will be able to subtract its business expenses from the overall total.
In the second argument, he said that as reaffirmed by the 2nd DCA, disgorgement must be granted to those who suffered financial losses, commonly referred to as “victims”. Victims are individuals or entities who incurred losses on their investments. Consequently, if an XRP purchaser acquired the cryptocurrency at $0.30 and its current price is $0.60, they do not qualify as victims, and thus, no case of disgorgement arises.
Hogan emphasized that the SEC has the authority to approximate disgorgement damages and place the responsibility on Ripple to challenge such estimates. “In conclusion, $770 million is NOT going to be $770 million, but something much less,” wrote the lawyer in his concluding note.