The U.S. Securities and Exchange Commission (SEC) is now pursuing a $102.6 million penalty from Ripple, a substantial reduction from the nearly $2 billion originally sought. Ripple recently proposed a penalty of no more than $10 million, citing the Terraform Labs settlement as justification. However, the SEC countered that such a low penalty “would not satisfy the purposes of the civil penalty statutes.”
SEC Now Demands $102.6 Million Penalty From Ripple in XRP Case
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SEC Seeks $102.6 Million From Ripple: $10 Million Is Too Low
The U.S. Securities and Exchange Commission (SEC) has replied to Ripple Labs’ request for a lower penalty in the ongoing XRP case. Ripple suggested a more reasonable penalty of no more than $10 million, drawing a comparison to the Terraform Labs settlement. The SEC initially sought a final judgment against Ripple of nearly $2 billion.
In a letter to District Judge Analisa Torres on June 14, the SEC explained:
In asking the Court to tether its penalty determination in this case to the settlement in Terraform, Ripple fails to note that the corporate defendant there is in bankruptcy, going ‘out of business for good.’
The regulator clarified that Terraform Labs have agreed to burn “the keys to all of its crypto asset securities,” “return a significant amount to investors in those securities,” and remove “two of the board members in charge at the time of the violations.”
In contrast, the SEC stressed: “Ripple is agreeing to none of this relief — in fact, Ripple is agreeing to nothing.”
The securities regulator added: “Resolutions where cash-strapped defendants agree to return funds to victims quickly and voluntarily agree to cease their violative conduct are unhelpful to deciding the amount of penalties necessary to punish and deter an undisputedly wealthy defendant who fails to recognize or acknowledge its violation of the securities laws, and who continues to enrich itself by engaging in conduct awfully similar to the conduct that resulted in the violation in the first place.”
Moreover, “Ripple also compares the size of the Terraform penalty to the amount of that defendant’s ‘gross sales,’ arguing the Court should impose the same (1.27%) ratio … But that’s not an apples-to-apples comparison,” the SEC emphasized. “Ripple avoids comparing the Terraform settlement’s penalty to the gross profit of the violative conduct. That ratio ($420 million/$3.587 billion) is significantly higher: 11.7%.” The securities watchdog concluded:
Applying it to the $876.3 million in gross profits the SEC here asks the Court to disgorge results in a much larger figure, a $102.6 million penalty, than the $10 million ceiling Ripple insists on … that low of a penalty would not satisfy the purposes of the civil penalty statutes.
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