Ripple Seeks to Reduce SEC Fines
Ripple Labs argues for reduced SEC penalties by citing the Terraform Labs case, highlighting inconsistencies and pushing for a fairer $10 million cap.
In its legal battle with the U.S. Securities and Exchange Commission (SEC), Ripple Labs Inc. has filed a new notice to the Southern District of New York. This document, dated June 13, 2024, aims to influence the court’s view on the SEC's proposed penalties and final judgment.
Ripple's lawyers, led by Michael K. Kellogg, have referenced a similar case against Terraform Labs. In the SEC vs. Terraform Labs Pte. Ltd., Terraform and CEO Do Hyeong Kwon were found guilty of massive securities fraud. On June 12, 2024, the court ordered Terraform to pay about $3.59 billion in disgorgement and a $420 million civil penalty, which is around 1.27% of their $33 billion sales.
Ripple argues that the penalties in their case are too high compared to the Terraform case. The SEC’s treatment of Terraform involved fraud and large investor losses, but Ripple is not accused of fraud.
Ripple contends that the SEC's penalties are too severe. They cite other cases where penalties were between 0.6% and 1.8% of revenues. Ripple's filing states: “The civil penalty sought by the SEC in Terraform demonstrates the unreasonableness of the civil penalty sought by the SEC in this case.” Ripple insists that these penalties are unfair and excessive, especially since their case lacks direct financial harm to institutional buyers.
By comparing their case with Terraform's, Ripple aims to show inconsistencies in the SEC’s penalties. This move is meant to argue for fairer treatment and a more reasonable fine. Ripple proposes a penalty cap of $10 million, much lower than the SEC’s suggested $2 billion fine for selling XRP to institutional investors. This highlights Ripple’s stance that the SEC’s demands are too harsh.
Ripple's recent filing is a key part of their defense, aiming to persuade the court by using the Terraform case as a reference. Ripple hopes to get a fairer outcome that aligns with the severity of their allegations.
Ripple’s new filing is a strategic attempt to reduce SEC penalties by referencing the Terraform Labs case. They argue for penalties more in line with similar cases and propose a $10 million cap instead of the SEC’s $2 billion fine. This filing not only questions the SEC’s approach but also seeks to set a precedent for fair penalties in the crypto industry. The outcome could have significant effects on Ripple and the broader cryptocurrency market.
