Ripple Labs was recently ordered to pay a $125 million penalty to the U.S. Securities and Exchange Commission (SEC) for improperly selling its XRP token. However, legal expert Jeremy Hogan suggested an alternative method of satisfying the judgment transferring the equivalent value in XRP to a designated federal stockpile address. While legally complex, this unconventional approach could be viable under specific legal precedents.
Hogan referenced a Supreme Court case from 1869, Willard v. Tayloe, which established that contractual obligations could be fulfilled using alternative forms of payment if both parties agree. Although Ripple’s case is not a contract dispute but a penalty enforcement, the fundamental principle remains relevant. If the SEC and Ripple agreed on payment in XRP rather than U.S. dollars, it could create a novel legal precedent within the crypto industry.
XRP Payment: Legal Viability, Regulation, and Market Impact
The 1869 ruling in Willard v. Tayloe involved a contractual agreement where payment was ordered to be made in gold instead of U.S. dollars. The Supreme Court ruled that specific relief should be granted if it serves justice and avoids undue hardship for either party. Hogan argues that a similar logic could apply to Ripple’s penalty, provided both the SEC and Ripple consent to the payment in XRP.
While this may seem like a legal loophole, it raises broader questions about the flexibility of financial penalties within regulatory frameworks. If precedent supports alternative settlement methods, it could open the door for future crypto-related cases where fines might be paid in digital assets rather than fiat currency.
This raises further questions about how government agencies view digital assets. Would accepting XRP as payment set a precedent for classifying it as a commodity rather than a security? Would it imply government endorsement of XRP’s legitimacy? These considerations highlight the broader implications of such a move beyond Ripple’s immediate legal battle.
If Ripple could settle its SEC penalty using XRP, it could signal a shift in regulatory attitudes toward cryptocurrencies. Government acceptance of digital asset payments could validate their role in financial settlements, potentially influencing future enforcement actions and corporate compliance strategies.
Ripple’s ongoing legal battle with the SEC shapes the digital asset regulatory landscape. While Jeremy Hogan’s argument presents an intriguing possibility, the likelihood of the SEC and Treasury approving an XRP-based penalty payment remains uncertain. If this approach were to be accepted, it could redefine how regulatory fines are handled in the crypto industry, setting a precedent for future cases.
