The ongoing legal dispute between Ripple and the U.S. Securities and Exchange Commission (SEC) has taken a new turn. Legal expert Jeremy Hogan has proposed that Ripple might settle its $125 million penalty in XRP rather than cash.
SEC Ruling Against Ripple and Legal Penalty
In August 2023, a federal judge ruled that Ripple had 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 in the future. While the company has made clear its intention to comply with legal rulings, the method by which it may settle the penalty is now under discussion. Attorney Jeremy Hogan recently suggested that the SEC could allow Ripple to pay the fine in XRP instead of U.S. dollars.
Legal Precedent and XRP as Payment
Hogan's argument is based on an 1869 U.S. Supreme Court case, which allowed a contract to be fulfilled in gold rather than cash. The principle behind that decision was that specific performance—in this case, paying a debt in a particular asset—could be an acceptable alternative under certain circumstances. Applying this logic to the current situation, Hogan suggests that Ripple and the SEC could agree to settle the fine using XRP, particularly given that the U.S. Treasury manages digital asset holdings and might have a mechanism for accepting such a payment.
U.S. Treasury’s Role in Digital Asset Management
The U.S. government’s strategy regarding digital assets has also come under scrutiny in this context. While Bitcoin has been designated as a long-term reserve asset and placed in the Strategic Bitcoin Reserve, other cryptocurrencies, including XRP, do not appear to receive the same treatment. Instead, XRP and assets like Cardano and Solana may be categorized under the U.S. Digital Asset Stockpile. This classification could allow the Treasury to sell these holdings at its discretion. If Ripple were to pay its fine in XRP, it remains uncertain whether the Treasury would retain or liquidate them. The decision could have implications for the market, given that a large-scale sale of XRP by the government could influence the asset’s price.
Hogan's perspective has sparked debate within the cryptocurrency community about the feasibility and potential impact of such a settlement method. Whether the SEC and Treasury would be willing to accept XRP in place of cash remains unclear. However, the discussion highlights ongoing uncertainties in how digital assets are treated under U.S. regulations. Ripple's approach to resolving its penalty will be closely watched as the legal proceedings continue.
