- Ripple and the SEC continue to clash over the size of the civil penalty for selling unregistered securities.
- The SEC has reduced its settlement offer to $876.3 million from the initial $2 billion, while Ripple argues that the penalty should be no more than $10 million.
Ripple (XRP) and the Securities and Exchange Commission (SEC) continue to clash over the size of the civil penalty for selling unregistered securities.
Ripple was found liable in 2023 for selling unregistered securities to institutional investors.
Since this ruling, the legal battle has shifted to the size of the civil penalty.
The SEC originally proposed a $2 billion penalty.
Ripple countered that the penalty should be no greater than $10 million based on a recent SEC settlement with another crypto company.
The SEC rejected this comparison for a number of reasons and argued that the penalty should be $876.3 million instead.
At the heart of this latest round of arguments is the SEC’s recent settlement with Terraform Labs.
XRP price action continues to swing alongside each new development in the case.
Ripple vs. SEC: The Terraform Labs Precedent
This latest round of arguments began when Ripple proposed using the recent $4.5 billion Terraform Labs settlement as a precedent.
Ripple argued that this same precedent applied in their case would see a civil penalty of no more than $10 million.
The SEC countered that the precedent does not apply for a number of important reasons.
The primary reasons are that Terraform Labs has admitted wrongdoing, made restitution to victims and is in bankruptcy proceedings.
Ripple, by contrast, has admitted to no wrongdoing and is an ongoing venture.
The SEC further argued that the penalty ratio from the Terraform Labs case applied to the Ripple profits in question would still result in a penalty of $102.6 million.
“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.”
– Official Securities and Exchange Commission statement.
Ripple Roller-Coasters Alongside SEC Legal Battle
XRP continues to see volatile price action alongside the highs and lows of the ongoing legal battle.
Investors have been concerned about the future of Ripple, given the size of the proposed penalties by the SEC.
However, Ripple executives have been vocally defending the health of their company.
While it is unlikely that Ripple’s $10 million settlement proposal will be accepted, it is also unlikely that the final penalty will be anywhere near the SEC’s $876 million proposal.
In response to the legal battle, Ripple has continued to expand its U.S. presence with the acquisition of custodial services.
These acquisitions are intended to signal the health of the company despite its legal troubles and its ongoing effort to improve its compliance with U.S. regulations.
