- The U.S. Securities and Exchange Commission (SEC) has rejected Ripple’s proposal for a significantly lower fine in their ongoing legal dispute over the sale of XRP tokens.
- The SEC considers Ripple’s proposed penalty of around $10 million to be grossly inadequate compared to the nearly $2 billion fine it has suggested.
- The legal battle, which began in December 2020, revolves around the SEC’s accusation that Ripple raised $1.3 billion through sales of the XRP token, which it views as an unregistered security.
The SEC and Ripple continue their legal tug-of-war over the sale of XRP tokens, with the SEC dismissing Ripple’s proposed $10 million fine as a mere “slap on the wrist”.
SEC Opposes Ripple’s Proposed Fine
In a recent court filing, the SEC argued against Ripple’s proposed penalty of around $10 million, suggesting it would be a mere “slap on the wrist” compared to the nearly $2 billion fine the regulator has suggested. The SEC maintains that such a low fine could potentially encourage other crypto asset issuers to violate Section 5 of the Securities Act, thereby depriving investors of the disclosures mandated by Congress.
Ripple’s Legal Battle with the SEC
The legal dispute between the SEC and Ripple has been ongoing since December 2020. The SEC accuses Ripple of raising $1.3 billion through sales of the XRP token, which it considers an unregistered security. Despite some of Ripple’s programmatic sales of XRP being ruled as not violating securities laws, other direct sales of the token to institutional investors were indeed deemed securities.
SEC Dismisses Ripple’s Assurances
The SEC also took issue with Ripple’s assurances that it would not violate the law again in the future. The regulator’s lawyers dismissed Ripple’s argument that it has obtained various licenses from different jurisdictions, some of which do not treat XRP sales as sales of securities. The SEC likens this to a New York restaurant claiming it doesn’t need a liquor license because it obtained a fishing license in California.
Ripple’s Response to the SEC’s Accusations
Ripple’s Chief Legal Officer, Stuart Alderoty, criticized the SEC on social media for its handling of the ongoing lawsuit. Alderoty accused the SEC of incorrectly applying the law and attempting to deceive the court. He expressed optimism about Ripple nearing the end of this legal battle while noting that others are just beginning to face similar challenges.
Conclusion
The ongoing legal dispute between the SEC and Ripple continues to unfold, with both parties holding firm to their positions. As the legal proceedings progress, the crypto community will be closely watching for any developments that could have far-reaching implications for the broader industry.
