- Ripple highlights SEC’s inconsistent penalties: 1.27% for TerraForm vs. 20x higher for Ripple without fraud.
- Ripple’s Notice of Supplemental Authority underscores SEC’s perceived bias and excessive penalty demands.
- SEC’s treatment of Ripple contrasts sharply with TerraForm’s, emphasizing alleged animus and unfair enforcement.
Ripple accuses the SEC of unfairly harsh penalties, highlighting discrepancies with TerraForm Labs’ case as evidence of bias.
Ripple’s Argument Against SEC’s Disproportionate Penalties
Ripple Labs has recently brought to light what it considers to be uneven punitive measures imposed by the Securities and Exchange Commission (SEC). According to Ripple, the penalties suggested for the company are excessively higher compared to other crypto-related cases, lacking any allegations of fraud.
SEC’s Penalty Framework Compared to TerraForm Labs
In its latest filing, Ripple elaborates on the penalties the SEC has previously accepted, which generally range from 0.6% to 1.8% of a defendant’s gross sales. For instance, in the Terraform Labs case, involving one of the largest securities frauds in U.S. history, the agreed penalty was merely 1.27% of Terra’s gross sales. This stands in stark contrast to the $876 million penalty proposed for Ripple, which is approximately 20 times higher than in similar cases.
Ripple’s Strategic Move Against SEC’s Alleged Bias
Ripple’s filing highlights a significant point of contention regarding the SEC’s approach. Their Notice of Supplemental Authority argues that the penalties sought against them are far beyond the norm, reflecting perceived bias. By referencing the Terraform Labs case, Ripple underscores the perceived unreasonableness and inconsistency in the SEC’s demands.
Parallel to SEC Strategies
This Notice of Supplemental Authority is a tactical maneuver by Ripple, drawing parallels to how the SEC has referenced the Terraform Labs ruling in previous situations. By employing a similar strategy, Ripple aims to showcase the inconsistency in the enforcement actions pursued by the SEC.
Discrepancies in SEC’s Enforcement
The punitive measures proposed against Ripple are seen as irregular, especially when compared to past precedents. For example, the SEC demanded Terraform Labs to pay $3.6 billion in disgorgement and an additional $420 million in civil penalties, just 1.27% of the company’s $33 billion gross sales. Ripple contends that its own penalty, devoid of fraud allegations, should align more closely with these typical figures.
Conclusion
Ripple has clearly positioned itself in opposition to what it deems unfair punishment by the SEC. By highlighting inconsistencies and drawing analogies to other cases, the company seeks to mitigate the penalties proposed against it. This unfolding legal dispute will potentially set significant precedents in the realm of cryptocurrency regulations and enforcement.
