The U.S. Securities and Exchange Commission (SEC) strongly opposes Ripple Labs’ latest request to reduce the fine, believing that the proposed amount is not sufficient to achieve the necessary punitive effect.

Ripple Labs challenges SEC’s $2 billion fine, citing Terraform settlement: $10 million fine would be just right

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Ripple faces obstacles in reducing fine

Ratio of fines that cannot be compared

SEC’s explanation

SEC’s calculation method: using proceeds from violations

Ripple’s fine comparison is simply too low

SEC proposes higher fines

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 $876.3 million civil penalty proposed by the regulatory agency.

However, in a letter to Judge Torres on June 14, the SEC rebutted by stating that the $4.2 billion settlement agreement reached with Terraform and its co-founder Do Kwon includes a $420 million civil penalty, primarily because the company has declared bankruptcy, agreed to return funds to investors, and dismissed “leaders responsible for the violations at the time.”

SEC stated, “Ripple does not agree to these remedies, in fact, Ripple does not agree to anything.”

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 calculating Terraform’s fine was the “total profit from the violations,” approximately $3.5 billion, with a penalty ratio close to 12%.

SEC believes that applying the same ratio to Ripple’s $876.3 million total profit would result in a fine of $102.6 million. “Such a low fine would not achieve the goals of civil penalty regulations,” SEC said.

Proposed fine by SEC

The total fine proposed by 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 battling in court, with SEC previously accusing Ripple of selling unregistered securities, a charge that Judge Torres agreed with, 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 the revenue it generated from XRP sales, as Judge Torres determined that these sales were unregistered securities.

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Further reading
XRP ETF is bound to happen, Ripple CEO: Bullish on XRP ETF coming next year
Ripple’s legal showdown with SEC enters final arguments, result expected in September