- The SEC has issued a formal reply to Ripple’s objection concerning the proposed penalty in their ongoing legal case.
- This response included a referenced penalty of $102.6 million for Ripple, significantly lower than the initial $2 billion requested.
- These developments come in the wake of a recent settlement involving Terraform Labs, which Ripple highlighted in its defense.
The SEC has responded to Ripple’s challenge regarding the fine, making significant adjustments to their initial demands and referencing a recent high-profile settlement.
SEC’s Revised Penalty Proposal Against Ripple
The United States Securities and Exchange Commission (SEC) recently adjusted its penalty proposal in the ongoing legal battle with Ripple. Initially demanding a substantial $2 billion, the SEC has now lowered the potential penalty to $102.6 million. This revision was communicated in a letter to District Judge Analisa Torres, in response to Ripple’s earlier objections.
Points Raised by Ripple in Defense
In their letter filed on June 13, Ripple argued that the penalties imposed in the Terraform Labs (TFL) settlement should serve as a benchmark for their case. According to Ripple, the TFL case involved a total penalty of $3.58 billion in disgorgement and $420 million in civil penalties, which equated to about 1.27% of TFL’s gross sales. Ripple highlighted that there was no finding of fraud in their case, contrasting it with the TFL case which involved two fraudulent schemes and substantial investor losses.
SEC’s Counterarguments on the TFL Comparison
In its Friday letter, the SEC refuted Ripple’s comparison of their case to the TFL settlement, suggesting that the two cases are not directly comparable. The SEC argued that the TFL settlement, resulting from an agreement during bankruptcy and other mitigating factors, holds limited value for determining Ripple’s penalties. The SEC noted that Ripple did not agree to similar terms and highlighted ongoing alleged violations by Ripple.
SEC’s Detailed Justification of the Penalty
The SEC also provided a nuanced justification for the reduced $102.6 million penalty, which contrasted sharply with the initial $2 billion request. The regulator recalculated the ratio of TFL’s penalty to its gross profit, which was 11.7%. Applying this ratio to Ripple’s gross profits of $876.3 million provided the revised figure. The SEC dismissed Ripple’s insistence on a much lower $10 million fine, stating that their proposed penalty was a reasonable adjustment based on both historical and contextual financial analysis.
Conclusion
In summary, the ongoing legal tussle between Ripple and the SEC took a significant turn with the SEC revising the proposed penalty to $102.6 million. This adjustment was influenced by various contextual factors, including comparisons with the TFL case and recalculated financial metrics. While Ripple’s defense noted discrepancies in fraud findings and proportions of penalties to gross sales, the SEC maintained its stance on the necessity for a substantial financial penalty. The case continues to generate significant interest in the cryptocurrency community, with many watching to see how the outcome will influence future regulatory actions in the sector.
