Stay Order Penalty Case Before Appeal

• Ripple seeks to delay $125M penalty as appeal looms, SEC consents to stay request.
• SEC and Ripple agree to hold funds in trust, appeal may influence future payments.
• Ripple’s appeal strategy could avoid $125M penalty, but a cross-appeal may impact chances.

Ripple Labs has requested a stay on the monetary portion of the judgment in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). This move comes as the deadline to pay the $125 million penalty approaches, a payment originally ordered by Judge Analisa Torres. Both Ripple and the SEC have signaled their intent to file an appeal, significantly impacting the trajectory of this high-profile case.

As noted by defense lawyer James K. Filan on X, Ripple’s request to Judge Torres on September 4 underscores the company’s need for a stay of the monetary judgment entered on August 7, 2024.

The timing is crucial, as the stay order is sought before September 6, the last date for Ripple to make the substantial payment to the SEC. The SEC has agreed to Ripple’s request, marking a rare moment of concord between the two adversaries.

The stakes in this case have risen with the potential for an appeal. Legal experts, including former SEC lawyers, have indicated that the likelihood of an appeal has increased following this filing. The agreement between Ripple and the SEC includes holding 111% of the monetary judgment in trust. This arrangement guarantees that the funds will be available to the SEC 30 days after the appeal deadline or upon the conclusion of the appeal.

Read also: Ripple Slams SEC for ‘Unreasonable’ Penalties, Cites Terraform Precedent

The SEC’s option to appeal hinges on the remedies ruling and other key decisions made by Judge Torres. The government agency has a 60-day window from the August 7 ruling to initiate an appeal. Legal observers anticipate that the SEC may challenge either the remedies or the summary judgment issued last year, potentially leading to a prolonged legal battle.

Ripple’s decision to request a stay suggests a tactical approach to delay payment until the appeal process is concluded. If the appeal goes in Ripple’s favor, the company may avoid the $125 million payout entirely. However, without a cross-appeal, Ripple might implicitly acknowledge the penalty, limiting the appeals court’s ability to overturn the monetary judgment.

In the XRP community, questions have surfaced about the potential outcomes if Ripple prevails in the appeal. Specifically, concerns revolve around whether the SEC would have to pay statutory interest on the returned penalty. Legal experts clarify that the cost of any bond posted by Ripple to secure the payment might be recoverable if the SEC loses the appeal. However, this scenario depends on whether Ripple pursues a cross-appeal.