Ripple Makes Strong Case for Reduced Penalty of $10 Million, Cites Terraform’s SEC Settlement in Appeal
In a recent development on June 13, Ripple Labs presented a compelling argument in its legal battle against the US Securities and Exchange Commission (SEC). Drawing parallels with the Terraform Labs settlement, Ripple is advocating for a reduction of the proposed penalty to $10 million. By highlighting this comparison, Ripple aims to challenge the SEC’s penalty proposal.
The ongoing dispute between Ripple and the SEC centers around the regulatory body’s hefty $2 billion penalty, which Ripple deems unreasonable. In a “notice of supplemental authority,” Ripple’s legal team emphasized the differences between their case and Terraform Labs’. While Terraform faced fraud charges that led to significant global losses, Ripple is solely accused of selling unregistered securities without any fraud allegations. Ripple argues that the SEC’s insistence on a similar penalty, despite the differing circumstances, is unjust.
Referencing the recent SEC and Terraform Labs settlement, Ripple underscores the excessive nature of the SEC’s penalty request and calls for a more moderate amount. The settlement, approved by New York District Court Judge Jed Rakoff on June 13, includes substantial disgorgement fines, a civil penalty, and prejudgment interest. This follows Terraform Labs and its former CEO Do Kwon agreeing to a significant fine in connection with their SEC fraud case.
Ripple’s legal battle with the SEC dates back to December 22, 2020, when the regulator filed a lawsuit alleging that Ripple unlawfully raised funds through the sale of XRP tokens. Despite a ruling in July 2023 that cleared Ripple of certain violations, the lawsuit persisted, targeting Ripple’s executives Brad Garlinghouse and Chris Larsen before charges against them were dropped in October 2023.
In response to the SEC’s proposed recovery and civil penalty of $1.95 billion in March 2024, Ripple contested the request, urging the Court to reject injunctions, disgorgement, and pre-judgment interest while proposing a reduced civil penalty of $10 million. Moreover, Ripple’s filing included financial details demonstrating its lack of gains to disgorge, a pivotal aspect of its defense against the SEC’s penalties.
As the legal saga between Ripple and the SEC continues, industry observers anticipate a resolution by the end of 2024.
