XRP, ripple v sec
  • Ripple is contesting a $1.95 billion penalty from the SEC, citing Terraform Labs’ $4.47 billion settlement to argue for a reduced fine of $10 million.
  • The comparison underscores Ripple’s claim that the SEC’s proposed penalties are disproportionate, given the absence of fraud allegations and minimal losses to institutional buyers.

In the ongoing legal battle between Ripple Labs and the Securities and Exchange Commission (SEC), Ripple is leveraging a recent settlement to push for a drastically reduced penalty. The SEC had initially proposed a hefty $1.95 billion penalty against Ripple, citing the illegal sale of XRP tokens. Ripple, however, is now arguing that this penalty is unjustified, especially in comparison to the recent settlement of Terraform Labs with the SEC.

The SEC recently settled with Terraform Labs for over $4.47 billion, a sum that includes recovery and penalties. Ripple, in response, pointed out that Terraform’s settlement underscores the unreasonableness of the SEC’s proposed penalties against it. Ripple’s legal team emphasized that the penalties sought by the SEC in the Terraform case were far lower in proportion to the defendant’s revenues, citing a range of 0.6% to 1.8% of gross revenues in comparable cases.

“Ripple has only been charged with distributing unregistered securities, unlike Terraform Labs which faced charges of civil fraud. Despite this distinction, the SEC’s proposed penalty against Ripple is disproportionately high,” argued Ripple’s lawyers in a recent filing.

The comparison to Terraform’s case is pivotal for Ripple, as it battles to reduce its own penalty to a mere $10 million. They contend that given the lack of allegations of fraud and the absence of substantial losses to institutional buyers, a penalty closer to Terraform’s range is more appropriate.

The legal saga between Ripple and the SEC began in December 2020, when the SEC first accused Ripple of illegally selling XRP tokens. Initially, the lawsuit also targeted Ripple’s CEO, Brad Garlinghouse, and Co-Founder, Chris Larsen, but these charges were later dropped. Last July, a New York federal court ruled that while the sale of XRP on exchanges and through algorithms didn’t violate securities law, sales to institutions did.

In March of the following year, the SEC proposed a substantial $1.95 billion penalty against Ripple, a move that Ripple vehemently opposed. Now, Ripple is pushing back against this proposed penalty, arguing that the SEC’s proposed fines are unreasonably high, especially in light of the Terraform settlement.

The Legal Battle Continues

The legal skirmish between Ripple and the SEC continues to evolve as both sides present their arguments. Ripple’s strategic use of the Terraform settlement as a benchmark highlights the complexity and significance of the case, which could have far-reaching implications for the cryptocurrency industry as a whole.

As the court deliberates on the appropriate penalty for Ripple, the outcome of this case will likely shape how future cases involving digital assets are handled by regulators in the United States. For now, Ripple remains steadfast in its defense, hoping to mitigate the financial repercussions and establish a precedent that could impact the entire cryptocurrency landscape.

While Ripple’s battle against the SEC is far from over, its attempt to reduce the penalty by citing the Terraform settlement underscores the high stakes and strategic maneuvering involved in this landmark case. The final decision will not only affect Ripple’s future but also potentially set regulatory standards for the broader digital asset market in the years to come.