United

Circuit

In a noteworthy shift in the financial regulatory legal field, Ripple Chief Legal Officer (CLO) <a href="https://bitcoinist.com/ripple-clo-coinbase-vs-sec-is-far-from-over/" target="_blank" rel="noopener ">Stuart Alderoty</a> has announced a crucial ruling by the Second Circuit Court of Appeals regarding the United States Securities and Exchange Commission (SEC) and Govil case. Particularly, this decision concerns the power of the regulatory watchdog to request disgorgement, an important tool for enforcement, in situations involving securities offenses. 
<h2 id="ripple-clo-highlights-setback-for-us-sec">Ripple CLO Highlights Setback For US SEC</h2> 
<a href="https://bitcoinist.com/ripple-clo-federal-judge-ruling-no-impact-xrp/" target="_blank" rel="noopener ">Ripple CLO</a> Stuart Alderoty, <a href="https://x.com/s_alderoty/status/1778445159870726511" target="_blank" rel="noopener nofollow">reported</a> that the Commission keeps suffering legal defeats in the Govil case. According to Aldeorty, the agency experienced another setback after the Second Circuit Court of Appeals declined to reexamine its ruling in Govil, which maintained that the SEC is not entitled to disgorgement from the seller if there is no financial harm to the buyer. 
The filing read: 
<blockquote>
 Appellee, Securities and Exchange Commission, filed a petition for panel rehearing, or, in the alternative, for rehearing en banc. The panel that determined the appeal has considered the request for panel rehearing, and the active members of the Court have considered the request for rehearing en banc.&nbsp;It is hereby ordered that the petition is denied.
</blockquote> 
Notably, the agency previously suffered a setback, which Alderoty drew the community’s attention to in his X post. In November last year, the SEC accused Govil of inducing his former company, Cemtrex, to issue securities under pretenses, promising investors that the $7.3 million they contributed would be used for business expenses.&nbsp; 
Meanwhile, they were utilized to support other business endeavors and the defendant’s personal fees. As part of a settlement, Govil offered all of its shares in the company, which both entities estimated to be worth roughly $5.6 million. It also gave Cemtrex an extra $1.5 million in the form of a secured promissory note. 
Consequently, the SEC demanded $5.8 million in disgorgement minus the promissory note’s face value. However, the Court ruled that the SEC cannot request a crushing disgorgement award without first demonstrating that “investors” had sustained financial harm. This is because there will be no penalties without concrete proof of harm. 
Alderoty reporting of this verdict highlights its ramifications for the cryptocurrency sector as a whole, as well as regulatory enforcement tactics. Furthermore, it underlines the ongoing legal disputes and regulatory uncertainty that firms like <a href="https://bitcoinist.com/ripple-emerge-tether-upcoming-stablecoin-launch/" target="_blank" rel="noopener ">Ripple</a> must deal with in the context of changing regulatory frameworks. 
<h2 id="what-this-could-mean-for-the-regulatory-body">What This Could Mean For The Regulatory Body</h2> 
These negative developments do not look good for the Commission, as they could be viewed as inaccurate decisions from the body. Additionally, it can also be considered an abuse of authority since there are already speculations that the SEC enforcement actions are exceeding its jurisdiction. 
With the Commission’s recent legal misfortune, Ripple and its devoted community are commemorating the major win. This is because it could result in a better outcome for their continuing <a href="https://bitcoinist.com/ripple-vs-sec-attorney-disgorgement-is-unlikely/" target="_blank" rel="noopener ">dispute</a> with the SEC. 
<img loading="lazy" decoding="async" src="https://www.tradingview.com/x/ab4oLuXd/" alt="Ripple" width="2273" height="1351">

Court Denies US SEC Disgorgement Powers In Govil Verdict: Ripple CLO

Table of Contents

Bitcoinist

Other articles published on Apr 12, 2024

Forget ScapesMania and BlockDag! BlastUP is Changing the Game for Blockchain Startups

El Salvador Takes Another Bold Step Towards Blockchain Adoption

Bitcoin ETF Fees: Grayscale Hints At Future Cuts, But There's A Catch

'Divine' Bitcoin Message Issued by Michael Saylor Leaves Community Pondering

$25B Could Flow In Hong Kong’s Bitcoin ETFs

Ondo (ONDO) Price Eyes Rally to $1.37, What’s Behind the Surge?

Join our free newsletter for daily crypto updates!