SEC Firmly Opposes Ripples Request for Reduced Fine
The U.S. Securities and Exchange Commission (SEC) strongly opposes Ripple Labs’ latest request to reduce the fine, believing that the amount of the fine is insufficient to achieve the appropriate punitive effect.
Ripple Labs challenges SEC’s $2 billion fine, citing Terraform settlement: $10 million fine is just right
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Ripple’s request to reduce the fine encounters obstacles
The incomparable fine ratio
SEC’s explanation
SEC’s calculation method: using proceeds from violations
Ripple’s fine comparison is simply too low
SEC proposes higher fines
Fines 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 SEC and Terraform Labs, once again requesting Judge Analisa Torres of the New York district court that the fine should not exceed $10 million, significantly lower than the $876.3 million civil fine proposed by the regulatory agency.
SEC’s rebuttal, however, on June 14, in a letter to Judge Torres, SEC rebutted 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 gone bankrupt, agreed to refund funds to investors, and dismissed the “leaders responsible for the violation at the time”.
SEC stated: “Ripple does not agree to any of these remedies. In fact, Ripple does not agree to anything.”
SEC further added that Ripple’s claim that Terraform’s $420 million civil fine 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 Terraform’s fine was the “total profit from the violation”, 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 cannot achieve the purpose of civil penalty regulations,” SEC said.
Fines proposed by SEC
SEC’s proposed total fine 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 SEC have been fighting in court, with SEC previously accusing Ripple of selling unregistered securities, a charge that Judge Torres agreed to, targeting institutional investors only.
Dispute over financial transparency
Last month, SEC opposed Ripple’s request to seal some of its financial data, arguing that the company should disclose its revenues from XRP sales, as Judge Torres ruled these sales were unregistered securities.
Ripple
SEC
XRP
Further reading:
XRP ETF is bound to happen, Ripple CEO: Bullish on XRP ETF launching next year
Ripple’s legal showdown with SEC enters final arguments, results expected in September
