Regulation
Ripple Fights $2 Billion SEC Fine, Citing Terra Settlement as Precedent
Ripple Labs has officially requested a reduction in the $2 billion penalty proposed by the United States Securities and Exchange Commission (SEC).
The company, which was engaged in a long legal battle with the SEC, considers that the proposed fines are disproportionate. In a “supplemental authority notice” released Thursday, Ripple says its fine should be closer to $10 million, drawing comparisons to recent fines imposed on Terraform Labs.
Comparison with Terraform Labs regulations
Ripple’s legal team is taking advantage of the recent settlement between the SEC and Terraform Laboratories to support their cause. On Wednesday, Terraform agreed to pay $4.47 billion in fines, a settlement later approved by a judge. Ripple’s notice highlights the discrepancy between the proposed $2 billion penalty and the fines imposed on Terraform, which they say involve more serious allegations.
Ripple’s lawyers said:
“The civil penalty sought by the SEC in Terraform demonstrates the unreasonableness of the civil penalty sought by the SEC in this matter.”
Furthermore, they Underlines that in similar or more serious cases, the SEC has imposed penalties ranging from 0.6% to 1.8% of the defendant’s gross revenues, suggesting that Terraform’s settlement aligns with this model.
Lack of fraud allegations
Ripple’s defense also differentiates its case from Terraform’s by emphasizing the absence of fraud allegations. THE The SEC’s case against Terraform included a jury’s decision in April that Terraform Labs and its co-founder, Do Kwon, engaged in civil fraud. Ripple emphasizes that no such allegations exist in its case and that institutional buyers of XRP did not suffer substantial losses.
“Here, in contrast, the SEC is seeking a civil penalty well in excess of this range, even though there is no allegation of fraud in this case and the institutional buyers did not suffer substantial losses,” the lawyers asserted. Ripple lawyers.
This comparison is a critical part of Ripple’s argument for a reduced penalty, positioning the company’s situation as less dire than that involving Terraform.
The SEC and Ripple have been involved in legal proceedings for several years. The SEC has accused Ripple of raising $1.3 billion through the sale of XRP, which it says is an unregistered security. Last year, Judge Analisa Torres of New York ruled that some of Ripple’s so-called programmatic sales of XRP did not violate securities laws due to a blind bidding process. However, it also determined that other direct sales of the token to institutional investors qualified as securities.
Although it is at the trial stage, the legal battle could drag on for years due to the complexity of the process and possible delays and appeals from both sides. According to Brad Garlinghouse, CEO of Ripple, the resolution could come as soon as this summer.
“My estimate is sometime before the end of summer. Someone asked me about the end of August, but I pointed out that September 21 is the end of summer,” he said. recently said.
Possible resolutions and market reactions
Another person who thinks the case could officially end in the coming months is U.S. Attorney Jeremy Hogan.
He considered a $100 million settlement,
“I say the judge will order 0 disgorgement but throw the SEC a bone and order Ripple to pay a $100 million fine.”
Some might view the SEC as the underdog in the lawsuit, given the company’s three partial court victories achieved throughout 2023. XRP price reacted positively after each triumph, meaning a decisive victory could again cause a substantial increase.