Former SEC Lawyer Says There Won’t Be Monetary Recovery for Early XRP Investors

Former SEC attorney asserts that there won’t be monetary recovery if Judge Torres rules that XRP sales between 2012 and 2015 are securities.  

As the lawsuit between Ripple and the SEC approaches its end, crypto community members and legal experts, have been discussing the possible outcome of the case. 

In a tweet yesterday, a former SEC lawyer Marc Fagel disclosed that there won’t be monetary recovery if Judge Torres rules that early XRP sales from 2012 to 2015 are securities. 

Fagel made this known after an XRP community member raised a question regarding a recent Unchained Podcast interview with Jason Gottlieb, a partner at Morrison Cohen. 

In the interview, Gottlieb said the SEC cannot charge Ethereum founders with offering unregistered security due to a five-year statute of limitations in place. According to Gottlieb, Ethereum was issued before five years ago, which makes it difficult for the SEC to make a move against the cryptocurrency. 

🧨 It was the question to Gary Gensler that rocked Crypto Twitter this week: Is ETH a security?

Crypto lawyer @ohaiom says the answer is clear.

🔊 Listen:

Full episode: https://t.co/A3FsSHJWZJ pic.twitter.com/5E7XzyehMW

— Laura Shin (@laurashin) April 21, 2023

Following Gottlieb’s remark, an XRP community member asked why Ripple didn’t use the five-year “statute of limitations” argument as a defense in the case, given that XRP was first issued in 2012 and the SEC sued Ripple in 2020, which represents an eight-year difference. 

Ripple v. SEC Case Not Barred to the Statute of Limitation 

Responding to the question, Fagel said the Ripple v. SEC lawsuit is not barred by the five-year statute of limitations because the securities regulator alleged that defendants sold XRP as a part of unregistered securities from 2012 through 2020. 

Fagel added that any monetary recovery would be limited to the five years before the SEC officially charged Ripple with violating securities laws. 

The SEC alleges that they continued selling XRP as part of an unregistered securities offering through 2020. So the case is not barred by the statute of limitations, though any monetary recovery is limited to the 5-year period before filing.

— Marc Fagel (@Marc_Fagel) April 23, 2023

Bill Morgan, a pro-XRP lawyer, raised a question about the monetary recovery issue, saying: 

“So if Judge Torres finds early sales of XRP from 2012 to 2015 are investment contracts but not sales after 2015, there is no monetary recovery?” 

Fagel asserted that in the “recent change of law,” early XRP investors between 2012 and 2015 would get non-monetary relief if Judge Torres considers the transactions as securities. 

Correct. Under a recent change in the law I believe they could get non-monetary relief (i.e. injunctions, bars), but I don’t know if that would apply retroactively.

— Marc Fagel (@Marc_Fagel) April 23, 2023