Ripple Labs is leveraging the recent settlement of the Securities and Exchange Commission (SEC) with Terraform Labs to lower the proposed nearly $2 billion penalty against it to $10 million, a “notice of supplemental authority” posted yesterday (Thursday) revealed.
A Push to Lower the Settlement Amount
The blockchain company has argued that the hefty $2 billion penalty proposed by the regulator for offering the XRP token to institutions is unreasonable and should be closer to $10 million.
“The civil penalty sought by the SEC in Terraform demonstrates the unreasonableness of the civil penalty sought by the SEC in this (Ripple’s) case,” the lawyers of the blockchain company said. “As Ripple’s opposition explained, in comparable (and even more egregious) cases, the SEC has agreed to civil penalties ranging from 0.6% to 1.8% of the defendant’s gross revenues. Terraform fits that pattern.”
Ripple also cited that the allegations against it are different from those against Terraform Labs, which faced charges of civil fraud. Ripple, on the other hand, has only been charged with distributing unregistered securities.
“Here, by contrast, the SEC seeks a civil penalty far exceeding that range, even though there are no allegations of fraud in this case and Institutional Buyers did not suffer substantial losses,” Ripple’s lawyers added. “Terraform thus confirms that the Court should reject the SEC’s disproportionate and unprecedented request and that an appropriate civil penalty would be no more than $10 million.”
????BREAKING: @Ripple files Notice of Supplemental Authority regarding TerraForm Labs Consent Judgment! The SEC v. RIPPLE case could end ANYTIME! #XRP pic.twitter.com/4n5RF5SiHY
— JackTheRippler ©️ (@RippleXrpie) June 13, 2024
A Long-Running Court Battle
Ripple has been fighting a long legal battle with the American regulator. The SEC first moved against the blockchain company in December 2020, alleging the illegal sale of XRP tokens to both retail and institutional investors, raising more than $1.3 billion. According to the regulator, XRP is unregistered securities.
The initial regulatory lawsuit named Ripple’s CEO, Brad Garlinghouse, and the Co-Founder, Chris Larsen, but charges against them were dropped last October. Last July, the New York federal court ruled that the sale of XRP on exchanges and through algorithms did not violate any American securities law; however, sales to institutions did.
Last March, the SEC proposed $1.95 billion in recovery and civil penalties from the blockchain company, which it heavily opposed.
Meanwhile, on Thursday, a US court approved the settlement between the SEC and Terraform Labs and its former CEO, Do Kwon, for a hefty sum of more than $4.47 billion, which combines recovery and penalty. Kwon, whose extradition fate from Montenegro hangs in the balance, will have to pay over $204 million himself.
This article was written by Arnab Shome at www.financemagnates.com.
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