Ripple Cites Binance Case to Challenge SEC Penalty, XRP Price Reacts Positively

• Ripple leverages a recent Binance ruling to argue for leniency in their ongoing SEC lawsuit, highlighting the overarching issue of regulatory uncertainty.
• The SEC has notably reduced its initial proposed penalty from $2 billion to $102.6 million, while Ripple advocates for a substantially lower fine capped at $10 million.
• Ripple’s legal team draws on recent judicial opinions to bolster their position against severe punishments.

Ripple subverts SEC claims over XRP sales, citing regulatory ambiguity and diminished penalties.

Strategic Legal Maneuvering by Ripple

The ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has recently seen significant strategic shifts.

Ripple has filed a Notice of Supplemental Authority to reference a recent decision in a separate case involving Binance. Judge Amy Jackson’s decision to dismiss the SEC’s claims that Binance’s BNB token sales constituted securities transactions may set a pivotal precedent. Ripple’s legal representative, Michael Kellogg, argues that this decision buttresses Ripple’s stance that their XRP sales do not necessitate the severe penalties the SEC seeks.

“This observation supports Ripple’s argument that providing clarity on the legality of the different types of sales of XRP was the most significant aspect of the Court’s summary judgment decision… The absence of regulatory clarity prior to this ruling strengthens Ripple’s case that the imposition of strict liability for some of their XRP sales – far fewer than the SEC alleged – doesn’t equate to reckless behavior warranting severe sanctions. Moreover, the SEC never claimed recklessness on Ripple’s part in their complaint,” the letter outlines.

The market has reacted positively to these developments; following the filing, XRP’s price has seen a modest increase, contrasting starkly with the sharp declines observed in Bitcoin (BTC) and Ethereum (ETH) within the same period.

Debating the Financial Penalty

The quantum of penalty remains a crucial point of contention in resolving the case. Initially, the SEC aimed for a colossal $2 billion fine, but Ripple argued for reducing this to no more than $10 million.

Ripple’s defense draws comparisons with the SEC’s previous dealings with Terraform Labs, asserting that allegations of fraud were explicit only against the now-defunct company. This comparison seeks to highlight the disproportionate nature of the proposed fines.

Consequently, the SEC moderated its stance, proposing a $102.6 million penalty:

“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%. Implementing this ratio to the $876.3 million in gross profits, the SEC here advocates for, translates into a $102.6 million penalty, rather than the $10 million cap Ripple is suggesting.”

Conclusion

The legal clash between Ripple and the SEC underscores significant themes in the current regulatory landscape for cryptocurrencies. Ripple’s reliance on recent judicial decisions and their push for reduced penalties due to regulatory ambiguity showcase a dynamic legal strategy. As the judiciary continues to navigate these uncharted waters, the outcomes from such cases will likely shape future regulatory frameworks and market behaviors in the crypto space.