Ripple Invokes Terraform Case To Slash SEC Penalties


In
the
ongoing
high-stakes
legal
battle
between
Ripple
Labs
Inc.
and
the
US
Securities
and
Exchange
Commission
(SEC),
the
fintech
company
has
submitted
a
significant
notice
of
supplemental
authority
to
the
Southern
District
of
New
York.
This
recent

filing,
dated
June
13,
2024,
aims
to
shift
the
judicial
perspective
regarding
the
SEC’s
pending
motion
for
remedies
and
the
entry
of
a
final
judgment

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Ripple
Vs.
SEC
Court
Update

Highlighting
a
parallel

SEC
case
against
Terraform
Labs,
Ripple’s
legal
representatives
present
a
comparative
analysis,
arguing
for
a
more
equitable
treatment
in
their
own
case.
The
filing
strategically
references
the
SEC
vs.
Terraform
Labs
Pte.
Ltd.,
where
Terraform
and
its
CEO

Do
Hyeong
Kwon
were
found
liable
for
conducting
“one
of
the
largest
securities
frauds
in
US
history,”
as
described
by
the
SEC.

In
that
case,
the
court
approved
a
final
consent
judgment
on
June
12,
2024,
which
resulted
in
Terraform
Labs
being
ordered
to
pay
approximately
$3.59
billion
in
disgorgement
and
a
$420
million
civil
penalty,
corresponding
to
about
1.27%
of
Terraform’s
$33
billion
gross
sales.
Ripple’s
notice,
authored
by
Michael
K.
Kellogg
of
Kellogg,
Hansen,
Todd,
Figel
&
Frederick,
P.L.L.C.,
leverages
this
outcome
to
challenge
the
proportionality
of
the
SEC’s
demands.

The
document
filed
by
Ripple’s
counsel
compares
the
SEC’s
treatment
in
the
Terraform
case
with
its
approach
towards
the
company,
highlighting
a
stark
contrast
in
penalties
relative
to
the
severity
of
allegations.
The
lawyers
point
out
that
unlike
Terraform,
which
was
involved
in
extensive
fraudulent
activities
leading
to
significant
investor
losses,
Ripple’s
case
involves
no
allegations
of
fraud.

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Furthermore,
they
argue
that
the
penalties
sought
by
the
SEC
are
disproportionately
high,
citing
that
penalties
in
similar
previous
cases
ranged
only
from
0.6%
to
1.8%
of
the
defendant’s
gross
revenues.
The
submission
includes
the
following
statement
to
underline
this
disparity:
“The
civil
penalty
sought
by
the
SEC
in
Terraform
demonstrates
the
unreasonableness
of
the
civil
penalty
sought
by
the
SEC
in
this
case.”

Moreover,
Ripple’s
legal
team
asserts
that
such
an
unbalanced
penalty
is
not
only
unprecedented
but
also
unjust,
given
the
absence
of
direct
financial
harm
to
institutional
buyers
typically
associated
with
cases
of
this
nature.

By
drawing
parallels
with
the
Terraform
case,
Ripple’s
legal
strategy
is
aimed
at
illustrating
what
it
perceives
as
an
inconsistency
in
the
SEC’s
application
of
penalties.
This
tactic
not
only
questions
the
fairness
of
the
SEC’s
actions
but
also
seeks
to
establish
a
basis
for
negotiating
a
more
reasonable
penalty.

Ripple’s
counsel
argues
for
a

civil
penalty
cap
at
$10
million,
significantly
lower
than
the
SEC’s
proposed
$2
billion
fine
for
selling
XRP
to
institutional
investors.

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At
press
time,
XRP
traded
at
$0.47967.

XRP
price
falls
below
$0.48,
1-week
chart
|
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on
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with
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Author: Jake Simmons


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