- Ripple pleads for a fine of not more than $10 million
- SEC says requested fine not enough
- Ripple faces a total fine of nearly $2 billion
The United States Securities and Exchange Commission (SEC) has rejected Ripple Labs’ plea for a reduced penalty. SEC said the reduced penalty Ripple Labs asked for would not be enough.
Ripple Labs Inc. is a provider of digital payment solutions and the creator of XRP cryptocurrency.
According to Cointelegraph, on June 13, Ripples quoted SEC’s settlement with Terraform Labs and asked Judge Analisa Torres of the United States District Court for the Southern District of New York to mandate SEC to accept a fine of “no more than $10 million” instead of the $876.3 million the regulator had proposed.
Wrong comparison
But in a letter to Judge Torres the next day, the SEC explained that the company (Terraform Labs) was bankrupt, agreed to repay investors' money, and dismissed executives who were "in charge at the time of the violations," which is why the $4.5 billion settlement with the company and co-founder Do Kwon was reached. The settlement also includes a $420 million civil penalty.
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Excerpt from the SEC’s letter. Credit: Pacer via Cointelegraph
But SEC explained that Ripple’s argument that the $420 million civil penalty Terraform paid was about 1.27% of its “$33 billion gross sales” was not an “apples-to-apples comparison.” The regulator further explained that Terraform's penalty was calculated at a ratio of nearly 12%, or "the gross profit of the violative conduct," which it estimated to be over $3.5 billion.
The SEC contended that if the same ratio were applied to the $876.3 million in gross profits that Ripple requested to be disgorged, then the company would be subject to a civil penalty of $102.6 million.
“That low of a penalty would not satisfy the purposes of the civil penalty statutes,” the SEC said.
Nearly $2 billion in penalties are proposed by the SEC for Ripple; these consist of $198.2 million in prejudgment interest, $876.3 million in civil penalties, and an additional $876.3 million in disgorgement.
XRP price movement since its launch
Stable but underwhelming performance
The SEC and Ripples have been involved in a legal battle since the SEC alleged in 2020 that Ripple sold unregistered securities. In a 2023 ruling, Torres acknowledged this, but only about sales to institutional investors.
XRP is a borderless coin running on the XRP Ledger blockchain. The court case has affected the coin's market performance in the past few years. Though the price has been relatively stable, experts say the coin has underperformed, given its wide acceptance.
