SEC Rejects Ripple’s Push for Lower Penalty
YEREVAN (CoinChapter.com) — The United States Securities and Exchange Commission (SEC) has rejected Ripple Labs’ request for a lower penalty. On June 13, Ripple asked for a penalty “no more than $10 million,” citing the SEC’s settlement with Terraform Labs. However, the SEC disagreed with this comparison, rejecting the company’s response.
SEC Stands Firm on $876.3 Million Penalty and “Ripple Is Agreeing to Nothing”
In a June 14 letter, the SEC explained why Ripple’s suggested penalty was too low. The SEC compared it to Terraform Labs’ $420 million penalty, but noted key differences. Terraform Labs settled for $4.5 billion, including returning money to investors and replacing its leadership. The SEC noted that Ripple has not agreed to similar actions.
“Ripple is agreeing to none of this relief — in fact, Ripple is agreeing to nothing.”
The SEC highlighted that Terraform Labs’ penalty was based on their $3.5 billion profit from the violations, resulting in a 12% penalty. In contrast, Ripple’s proposed $10 million penalty is only 1.27% of their $876.3 million profits. The SEC argued that such a low penalty would not meet the goals of civil penalties.
The SEC proposed penalties for Ripple total nearly $2 billion. This includes $876.3 million in civil penalties, $876.3 million in disgorgement, and $198.2 million in prejudgment interest. The SEC’s stance shows its intent to enforce strict penalties.
Ripple’s Legal Battle Since 2020
Ripple and the SEC have been in legal disputes since 2020 when the SEC accused Ripple of selling unregistered securities. In July 2023, Judge Analisa Torres ruled that Ripple’s XRP sales were unregistered securities when sold to institutional investors. This ruling has led to ongoing penalty discussions.
In May, the SEC objected to Ripple’s attempt to seal some of its financial records. The SEC insisted that Ripple should disclose revenue from XRP sales, which Judge Torres had ruled were unregistered.
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