The United States Securities and Exchange Commission (SEC) and Ripple Labs have been embroiled in a legal battle over the sale of XRP for more than three years. The lawsuit has now reached its final stage.
Following a significant shift in cryptocurrency monitoring by the United States government as elections near, the SEC has lobbied for a settlement with Ripple.
What’s the news?
The SEC has categorically refused Ripple Labs’ plea to reduce the civil penalty. Ripple had requested a maximum penalty of $10 million, which was significantly lower than the SEC’s proposal of $876.3 million. The SEC also indicated that the proposed punishment would be insufficient for the goal that Ripple wanted to achieve.
The primary contention displayed by Swell in an exertion to lower the fine was the generally later settlement between Terraform Labs and the SEC. On June 13, Ripple used a $4.5 billion settlement between Terraform Labs and the SEC, which included a $420 million civil fine. Ripple proposed a similar reduction in its fine.
In reality, a Manhattan jury found TerraForm Labs blameworthy of extortion in April 2024. Later, even though TerraForm Labs only had $75 million in known assets, the company agreed to a $4.47 billion settlement with the SEC.
SEC’s Reaction to the Argument Made by Ripple
The SEC answered in a letter to Unused York Area Court Judge Analisa Torres that the cases were not similar. The SEC underlined that Terraform Labs was bankrupt, had promised to repay investor funds, and had found the leaders guilty of the crimes. In contrast, Ripple had not consented to any such measures.
According to the SEC, the $420 million civil fine for Terraform Labs was based on a different criterion, so the comparison to Ripple was invalid. More than $3.5 billion, or about 12% of Terraform’s gross income from illegal activity, was the punishment.
In Ripple’s case, the SEC requested the recovery of $876.3 million in gross profits; if the same ratio were applied, it would mean a civil penalty of $102.6 million. According to the SEC, the minimum penalty would not accomplish the goals of the civil penalty provisions, which are to deter infractions and enforce accountability.
Fines and legal battles
In 2020, the SEC filed a lawsuit against Ripple, alleging that the company sold securities without registration. The US SEC asked the court to consider releasing $102.6 million for the $876.3 million XRP sale that was found to have violated securities laws in its counter letter.
