Crypto News – SEC Rejects Ripple’s Plea for Reduced Penalty

Crypto News – SEC Rejects Ripple’s Lower Penalty Request

Crypto News- The United States Securities and Exchange Commission (SEC) has strongly criticized Ripple Labs’ latest request for a lower penalty, arguing that the proposed amount is insufficient.

On June 13, Ripple referenced the SEC’s settlement with Terraform Labs to advocate for a penalty of “no more than $10 million” from Judge Analisa Torres of the United States District Court for the Southern District of New York. This is significantly lower than the $876.3 million civil penalty suggested by the SEC.

However, in a June 14 letter to Judge Torres, the SEC countered this request. The SEC highlighted its $4.5 billion settlement with Terraform Labs and co-founder Do Kwon, which included a $420 million civil penalty. This settlement was influenced by Terraform’s bankruptcy status, its agreement to reimburse investors, and the dismissal of leaders responsible for the violations.

Ripple is agreeing to none of this relief — in fact, Ripple is agreeing to nothing.

It dismissed Ripple’s comparison of Terraform’s $420 million civil penalty being 1.27% of its “$33 billion gross sales” as invalid. Instead, the SEC noted that it based Terraform’s penalty on “the gross profit of the violative conduct,” which was over $3.5 billion — resulting in a nearly 12% penalty ratio.

SEC Advocates for Higher Penalty Ratio to Fulfill Statutory Purposes

If the same ratio were applied to Ripple’s gross profits of $876.3 million, the penalty would be $102.6 million, according to the SEC. “That low of a penalty would not satisfy the purposes of the civil penalty statutes,” the SEC argued. The proposed penalties for Ripple total nearly $2 billion, including $198.2 million in prejudgment interest, an $876.3 million civil penalty, and another $876.3 million in disgorgement.

The legal battle between the SEC and Ripple has been ongoing since 2020, when the SEC accused Ripple of selling unregistered securities. Judge Torres ruled in July 2023 that Ripple did sell unregistered securities, but only to institutional investors.

In May, the SEC opposed Ripple’s attempt to keep some financial details confidential, insisting that the firm should disclose the revenue generated from XRP sales that were ruled as unregistered by Torres.

FAQ: SEC vs. Ripple Labs Penalty Dispute

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