U.S. Securities and Exchange Commission (SEC) firmly opposed Ripple’s attempt to lower a proposed $2 billion fine in their ongoing legal dispute. The SEC argued that Ripple’s situation is significantly different from that of Terraform Labs.
In a “notice of supplemental authority” filed on June 13th, Ripple cited the SEC’s recent settlement with Terraform Labs as a precedent. This sparked the current dispute. Ripple referenced the SEC’s settlement with Terraform Labs, which involved a $4.47 billion agreement and a $420 million civil penalty. Ripple argued that this should influence their own case.
However, the SEC responded in a letter on June 14th. They addressed Judge Torres, explaining why the Terraform Labs settlement is not comparable to Ripple’s case. The SEC noted that Terraform Labs was bankrupt, had to return investor funds, and had fired the executives responsible for the violations. They argued that Ripple had not taken any such actions.
The SEC stated, “Ripple is agreeing to none of this relief—in fact, Ripple is agreeing to nothing.”
Ripple claimed that Terraform’s $420 million penalty was about 1.27% of its “$33 billion gross sales.” The SEC countered this by explaining that the Terraform penalty was actually 11.7% of gross profits, not sales. They suggested that if Ripple’s gross profits were $876.3 million, a fair penalty would be $102.6 million, which is far more than the $10 million Ripple proposed. The SEC argued that such a low penalty would not fulfill the purposes of civil penalty statutes.
The SEC’s proposed penalties for Ripple total almost $2 billion. This includes $198.2 million in prejudgment interest, $876.3 million in civil penalties, and another $876.3 million in disgorgement.
Stuart Alderoty, Ripple’s chief legal officer, responded negatively to the SEC’s stance in a post on X. He highlighted that the court had clarified that XRP is not a security, and there were no victims needing compensation. He also noted that Ripple is thriving, which counters the SEC’s arguments. Alderoty added, “At least the SEC seems to have abandoned its absurd demand for $2 billion.”
Also read: Crypto Startup Funding Hits $100 Billion Since May 2014
