The Securities and Exchange Commission (SEC) strongly opposes Ripple Labs’ latest request to reduce the fine, believing that the amount of the fine is not sufficient to achieve the necessary punitive effect.
Ripple Labs opposes the SEC’s $2 billion fine, citing the Terraform settlement case: a $10 million fine is just right.
Ripple CEO unveils $RLUSD stablecoin, XRPL EVM sidechain at XRPL Community Summit.
Ripple’s request to reduce the fine faces obstacles
The fine ratio that cannot be compared
SEC’s explanation
SEC’s calculation method: using the proceeds of the violation
Ripple’s fine comparison is simply too low
SEC proposes a higher fine
Fine proposed by SEC
Legal disputes have been ongoing since 2020
Dispute over financial transparency
Citing the Terraform Labs case last week, Ripple referenced the settlement agreement between the SEC and Terraform Labs, once again requesting Judge Analisa Torres of the New York court that the fine should not exceed $10 million, far below the regulatory agency’s proposed $876.3 million civil fine.
SEC’s rebuttal, however, in a letter to Judge Torres on June 14, SEC countered that the $4.5 billion settlement agreement reached with Terraform and its co-founder Do Kwon included a $420 million civil fine, primarily because the company had filed for bankruptcy, agreed to return funds to investors, and fired “those responsible for the violations at the time.”
SEC stated, “Ripple does not agree with these remedies. In fact, Ripple disagrees with everything.”
SEC added that Ripple’s argument that Terraform’s $420 million civil fine is equivalent to “1.27% of its $33 billion in total sales” is not a “comparable data.”
The regulatory agency pointed out that the basis for measuring Terraform’s fine was the “total profit from the violations,” which was approximately $3.5 billion, with a fine ratio of nearly 12%.
SEC believes that if the same ratio is applied to Ripple’s $876.3 million in total profits, the fine would be $102.6 million. “Such a low fine would not achieve the purpose of civil fine regulations,” SEC said.
SEC’s proposed fine
The total amount of the fine proposed by SEC for Ripple is close to $2 billion, including $198.2 million in pre-judgment interest, $876.3 million in civil fines, and an additional $876.3 million in disgorgement.
Legal disputes have been ongoing since 2020
Since 2020, Ripple and the SEC have been fighting in court, with the SEC previously accusing Ripple of selling unregistered securities, a charge that Judge Torres agreed to, stating that these sales were only for institutional investors.
Dispute over financial transparency
Last month, the SEC opposed Ripple’s request to seal some of its financial data, arguing that the company should disclose its income from XRP sales, as Judge Torres determined that these sales were unregistered securities.
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