Ripple Seeks Reduced Civil Penalty in Ongoing SEC Lawsuit, Citing Terraform Labs Case
Summary:
Ripple's legal team has requested a court to contemplate a suitable civil penalty in its ongoing lawsuit against the U.S. Securities and Exchange Commission (SEC). Citing the recent settlement between the SEC and Terraform Labs, Ripple argues against the SEC's demand for approximately $2 billion, proposing a maximum penalty of $10 million. This move steams from the conflict that began in December 2020 when the SEC accused Ripple of fundraising via XRP, an unregistered security. The dispute remains unresolved, with the court yet to set a new trial date.
Ripple's legal representatives have approached a court to contemplate a "suitable" civil penalty in the blockchain company's ongoing case against the United States Securities and Exchange Commission (SEC), referenced to a settlement between the regulatory body and Terraform Labs. The legal team representing Ripple filed an additional authority notice on June 13 in the U.S. District Court for the Southern District of New York, claiming the SEC's civil penalty to be "excessive". They reference a recently settled case involving Terraform. Prior to Ripple's legal action, a $4.5 billion agreement between Terraform Labs, co-founder Do Kwon, and the SEC received federal judge approval.
The SEC seeks approximately $2 billion from Ripple for disgorgement, pre-judgement interest, and civil penalties. Ripple, however, proposes that any penalty imposed should not exceed $10 million. Ripple's lawyers reiterated similar arguments in relation to penalties from the SEC's cases against firms such as Block.one, Genesis Global Capital, and Telegram, but specifics about the company's gross revenue were redacted from the filing.
Ripple's legal counsel pointed out that in analogous cases, and even in cases with more severe allegations, the SEC agreed to civil penalties amounting to 0.6% to 1.8% of the defendant's total revenues. The Terraform case follows this trend. In contrast, the SEC's penalty for Ripple significantly surpasses this range, despite the absence of fraud allegations and no substantial loss suffered by institutional buyers. The lawyers argue that the court should reject SEC's exorbitant and unprecedented demand and agree to a more "appropriate" civil penalty of no more than $10 million.
This has been one of the most protracted legal battles in the crypto sphere, with Ripple's dispute with the SEC starting in December 2020 when the regulator accused the blockchain firm of fundraising through XRP, an unregistered security. The case set an important legal precedent in July 2023 when Judge Analisa Torres stated that Ripple's XRP token wasn't a security relevant to exchanges' programmatic sales.
In October 2023, the SEC decided to drop the case against Ripple CEO Brad Garlinghouse and Executive Chair Chris Larsen, expressing its intention to discuss plans with the blockchain company. Judge Torres postponed the SEC-Ripple trial initially planned for April, with no explicit future date. At this moment, the court has yet to announce a new trial date.
Published At
6/14/2024 7:07:37 PM
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