TLDR
The
ongoing
legal
battle
between
the
United
States
Securities
and
Exchange
Commission
(SEC)
and
Ripple
Labs
has
taken
another
turn
as
the
SEC
has
rejected
Ripple’s
argument
for
a
lower
civil
penalty.
Ripple
had
proposed
a
maximum
penalty
of
$10
million,
significantly
lower
than
the
$876.3
million
civil
penalty
sought
by
the
SEC.
In
an
attempt
to
reduce
the
penalty,
Ripple
cited
the
SEC’s
recent
settlement
with
Terraform
Labs
and
its
co-founder,
Do
Kwon.
The
$4.5
billion
settlement
included
a
$420
million
civil
penalty,
which
Ripple
argued
was
around
1.27%
of
Terraform
Labs’
gross
sales.
Ripple’s
lawyers
claimed
that
in
comparable
cases,
the
SEC
had
agreed
to
civil
penalties
ranging
from
0.6%
to
1.8%
of
the
defendant’s
gross
revenues.
The
@SEC
is
raging.
Ripple
defended
itself
–
“agreeing
to
nothing.”
The
court
gave
clarity
that
XRP
is
not
a
security.
There
are
no
“victims”
to
compensate.
And
worst
of
all
for
the@SEC,
Ripple
is
thriving.
But
at
least@SEC
seems
to
have
abandoned
its
absurd
demand
for
$2B.https://t.co/KVSkB9OqlH
—
Stuart
Alderoty
(@s_alderoty)June
15,
2024
However,
the
SEC
countered
Ripple’s
argument,
stating
that
the
cases
were
not
an
“apples-to-apples
comparison.”
The
regulator
pointed
out
that
Terraform
Labs
is
now
bankrupt,
has
agreed
to
return
money
to
investors,
and
has
fired
the
leaders
who
were
in
charge
at
the
time
of
the
violations.
In
contrast,
Ripple
has
not
agreed
to
any
such
relief
measures.
The
SEC
further
explained
that
the
civil
penalty
against
Terraform
Labs
was
based
on
the
gross
profit
of
the
violative
conduct,
which
amounted
to
over
$3.5
billion,
resulting
in
a
penalty
ratio
of
nearly
12%.
Applying
the
same
ratio
to
Ripple’s
case,
where
the
SEC
is
seeking
disgorgement
of
$876.3
million
in
gross
profits,
would
result
in
a
civil
penalty
of
$102.6
million.
The
SEC
argued
that
such
a
low
penalty
would
not
satisfy
the
purposes
of
the
civil
penalty
statutes.
In
total,
the
SEC
is
seeking
nearly
$2
billion
in
penalties
from
Ripple,
which
includes
$876.3
million
in
disgorgement,
$198.2
million
in
prejudgment
interest,
and
$876.3
million
in
civil
penalties.
These
steep
fines
aim
to
discourage
violations
and
enforce
responsibility
in
the
cryptocurrency
industry.
The
legal
battle
between
the
SEC
and
Ripple
began
in
2020
when
the
SEC
claimed
that
Ripple
sold
unregistered
securities.
In
July
2023,
Judge
Analisa
Torres
of
the
United
States
District
Court
for
the
Southern
District
of
New
York
ruled
that
Ripple
did
sell
unregistered
securities,
but
only
to
institutional
investors.
As
the
case
continues,
the
SEC
has
opposed
Ripple’s
bid
to
seal
some
of
its
financial
documents,
arguing
that
the
firm
should
disclose
the
revenue
it
earned
from
XRP
sales
that
were
deemed
unregistered
by
Judge
Torres.
Go to Source
Author: Oliver Dale
