Ripple Labs is taking advantage of the recent settlement reached by the Securities and Exchange Commission (SEC) with Terraform Labs to reduce the proposed penalty against it of approximately $2 billion to $10 million, a “supplemental authority notice” published yesterday (Thursday) revealed. .
A payment to reduce the settlement amount
The blockchain company argued that the massive $2 billion penalty proposed by the regulator for offering XRP tokens to institutions was unreasonable and should be closer to $10 million.
“The civil penalty sought by the SEC for Terraform demonstrates the unreasonableness of the civil penalty sought by the SEC in this (Ripple) case,” the blockchain company's lawyers said. “As Ripple’s dissent demonstrated, in similar (and more egregious) cases, the SEC has agreed to impose civil penalties ranging from 0.6% to 1.8% of the defendant’s gross revenue. Terraform fits this pattern.
Ripple also noted that the allegations against it differ from those against Terraform Labs, which has faced civil fraud charges. On the other hand, Ripple was only accused of distributing unregistered securities.
“Here, by contrast, the SEC is seeking a civil penalty well beyond that range, even though there were no allegations of fraud in this case and the institutional buyers did not suffer significant losses,” Ripple’s lawyers added. “Terraform therefore asserts that the court should deny the SEC's disproportionate and unprecedented request and that the appropriate civil penalty would not exceed $10 million.”
🚨Urgent: @ripple Supplemental Authority Notice Files Regarding TerraForm Labs Consent Ruling! SEC v. RIPPLE COULD END AT ANY TIME! #XRP pic.twitter.com/4n5RF5SiHY
– JackTheRippler ©️ (@RippleXrpie) June 13, 2024
A long-term legal battle
Ripple is locked in a long legal battle with the US regulator. The SEC first moved against the blockchain company in December 2020, alleging the illegal sale of XRP tokens to both retail and institutional investors, raising more than $1.3 billion. According to the regulator, XRP is an unregistered security.
The initial regulatory lawsuit named Ripple's CEO, Brad Garlinghouse, and co-founder, Chris Larsen, but the charges against them were dropped last October. Last July, a federal court in New York ruled that selling XRP on exchanges and through algorithms does not violate any US securities law; However, I did sales to enterprises.
Last March, the SEC proposed a $1.95 billion recovery and civil penalties from the blockchain company, which it strongly opposed.
Meanwhile, a US court on Thursday approved the settlement between Terraform Labs and its former CEO, Do Kwon, for a whopping sum of more than $4.47 billion, which combines restitution and penalty. Kwon, whose extradition from Montenegro is at stake, will have to pay more than $204 million himself.
This article was written by Arnab Shomi at www.financemagnates.com.