SEC Contests Ripple Labs' Plea for Reduced Penalty, Proposing $102.6M Instead
Summary:
The U.S. Securities and Exchange Commission (SEC) disputes Ripple Labs' plea for a reduced $10 million penalty, asserting it's inadequate compared to the proposed $876.3 million. The SEC refutes Ripple's analogy with Terraform Labs' settlement and argues that Ripple's penalty should be $102.6 million, a figure calculated based on Terraform's gross violation profits. Currently, Ripple's proposed penalties total nearly $2 billion. The SEC accused Ripple of selling unregistered securities, partially upheld by Judge Torres, who confirmed guilt only when sold to institutional investors.
The U.S. Securities and Exchange Commission (SEC) has disputed Ripple Labs' plea for a reduced penalty, insisting that the proposed reduction is inadequate. The blockchain firm, Ripple, referencing SEC's settlement with Terraform Labs, recently appealed to Judge Analisa Torres of the New York District Court, suggesting a mere $10 million penalty, sharply contrasting the SEC's proposed fine of $876.3 million. Just one day later, on June 14th, the SEC refuted Ripple's plea, stating that its $4.5 billion settlement with Terraform and Do Kwon, its co-founder, inclusive of a $420 million civil penalty, was implemented due to Terraform's bankruptcy, agreement to repay investors, and the termination of responsible leaders. Ripple, however, doesn't agree to any of these conditions. The SEC also disagreed with Ripple's analogy about Terraform's penalty being equivalent to 1.27% of its $33 billion gross sales, claiming this was not a comparable scenario. The SEC calculated Terraform’s penalty against its gross profit from the alleged violation, which totalled over $3.5 billion, equating to almost 12%. The SEC contended that if this same percentage were applied, Ripple should pay a penalty of $102.6 million against its contested gross profits of $876.3 million. The SEC maintained that a lower penalty wouldn't fit the purpose of the civil penalty laws. Current penalties proposed for Ripple by the SEC amount to nearly $2 billion. This sum includes $876.3 million for disgorgement and a civil penalty, and $198.2 million in prejudgment interest. The legal battle between Ripple and the SEC has been ongoing since last year when the SEC accused Ripple of selling unlisted securities. This claim was partially upheld by Judge Torres, confirming that Ripple was guilty only when these were sold to institutional investors. Furthermore, last month the SEC opposed Ripple’s attempt to conceal some financial details, arguing that the company should reveal the revenues earned from XRP sales identified as unregistered by Judge Torres.
Published At
6/17/2024 4:37:57 AM
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