Ripple Contests U.S. SEC's Proposed $2 Billion Penalty in Ongoing Lawsuit

Ripple Contests U.S. SEC’s Proposed $2 Billion Penalty in Ongoing Lawsuit

Ripple has challenged the United States Securities and Exchange Commission’s (SEC) request to impose a $2 billion fine on it, arguing that such a penalty is unjustified.

In a recent court filing, Ripple Labs opposed the SEC’s bid to levy the hefty fine, urging the Court to reject the SEC’s demands for an injunction, disgorgement, and pre-judgment interest.

According to the blockchain company,

“The SEC’s Draconian remedial requests are ungrounded in law or principle. This Court should reject them in their entirety.”

Ripple emphasized its commitment to future compliance with regulatory guidance, stating that such a substantial penalty could have far-reaching implications for the cryptocurrency industry as a whole. The firm argued that the fine would be comparable to what’s expected in digital-asset cases with allegations of recklessness or fraud, not its case.

The SEC’s proposed fine comprises $876 million in disgorgement, $198 million in pre-judgment interest, and an additional $876 million in civil penalties, totalling nearly $2 billion. The regulator made this request as part of its Motion for Remedies and Entry of Final Judgment to the Court as its lawsuit against the blockchain company nears its conclusion.

Stuart Alderoty, Ripple Labs’ Chief Legal Officer, deemed the SEC’s request “unreasonable.” He advocated for a more moderate fine of $10 million, which he believes is a fairer reflection of Ripple’s actual revenues.

Alderoty further criticized the securities regulator’s request, describing it as part of an “ongoing intimidation against all of crypto” in the United States. He expressed confidence that Ripple had succeeded on “significant” issues and hoped the judge would approach the final remedies phase of the case impartially.

Ripple CEO Brad Garlinghouse echoed these concerns, cautioning about the lasting effects of the SEC’s actions and policies.

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This legal battle between Ripple and the SEC has drawn significant attention within the cryptocurrency industry, with many viewing it as a pivotal case that could establish a precedent for digital asset regulation in the United States.

Recall that Ripple scored a partial victory against the regulator last year. The presiding judge, Analisa Torres, ruled that selling its XRP token to institutional investors doesn’t qualify as securities sales, which the regulator claimed, but only when sold to retail investors.

The SEC is expected to submit its reply brief by May 6, 2024, before the date for the final judgment is fixed.

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