The U.S. Securities and Exchange Commission (SEC) strongly opposes Ripple Labs’ latest request to reduce the fine, arguing that the proposed fine amount is not sufficient to achieve the necessary punitive effect.
Ripple Labs criticizes SEC’s $2 billion fine as excessive, citing Terraform Labs settlement: $10 million fine is just right.
Ripple CEO introduces $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 from the violation.
Ripple’s fine comparison is simply too little.
SEC proposes a higher fine.
Fine proposed by SEC.
Legal dispute has been ongoing since 2020.
Dispute over financial transparency.
Citing the Terraform Labs case last week, Ripple referenced the settlement agreement between SEC and Terraform Labs, once again requesting Judge Analisa Torres of the New York district court that the fine should not exceed $10 million, far below the regulatory agency’s proposed $876.3 million civil penalty.
SEC’s rebuttal, however, came in a letter to Judge Torres on June 14, stating that the $4.5 billion settlement agreement reached with Terraform and its co-founder Do Kwon includes a $420 million civil penalty, primarily because the company has gone bankrupt, agreed to return funds to investors, and dismissed the “leaders responsible for the violations at the time.”
SEC stated: “Ripple disagrees with these remedies, in fact, Ripple disagrees with everything.”
SEC further added that Ripple’s claim that Terraform’s $420 million civil penalty is equivalent to “1.27% of its $33 billion total sales” is not a “comparable data.”
The regulatory agency pointed out that the basis for measuring the Terraform fine was the “total profit from the violations,” which is approximately $3.5 billion, with a fine ratio close to 12%.
SEC believes that if the same ratio is applied to Ripple’s $876.3 million total profit, the fine would be $102.6 million. “Such a low fine does not achieve the purpose of civil penalty regulations,” SEC said.
Fine proposed by SEC.
The total amount of the fine proposed by the SEC for Ripple is close to $2 billion, including $198.2 million in pre-judgment interest, $876.3 million in civil penalties, and an additional $876.3 million in disgorgement.
Legal dispute has been ongoing since 2020.
Since 2020, Ripple and SEC have been fighting in court, with the SEC previously accusing Ripple of selling unregistered securities, a charge that Judge Torres agreed to, targeting only 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 revenue from XRP sales, as Judge Torres ruled that these sales are unregistered securities.
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