SEC Pursues $102.6 Million Penalty from Ripple, Rejects $10 Million Proposal
The U.S. Securities and Exchange Commission (SEC) has responded to Ripple Labs' plea for a reduced penalty in the ongoing XRP case. Ripple recommended a more modest fine of $10 million, drawing parallels to the Terraform Labs settlement. Initially, the SEC aimed for a hefty sum of nearly $2 billion from Ripple.
In a letter to District Judge Analisa Torres dated June 14, the SEC elaborated on its stance:
Ripple's attempt to anchor the penalty decision to the Terraform settlement overlooks the fact that the said corporate entity is bankrupt, facing permanent closure.
The regulatory body clarified that Terraform Labs has committed to destroying "the keys to all of its crypto asset securities," repaying a substantial sum to investors, and dismissing "two board members responsible during the violation period."
In contrast, the SEC emphasized: "Ripple is not agreeing to any of these remedies - in fact, Ripple is not agreeing to anything."
The SEC further stated: "Resolutions where financially struggling defendants promptly return funds to victims and voluntarily cease violative activities do not assist in determining the appropriate penalties needed to penalize and deter a clearly affluent defendant that refuses to acknowledge its violation of securities laws and continues to profit from similar misconduct."
Additionally, "Ripple also compares the Terraform penalty's proportion to the defendant's 'gross sales,' suggesting a similar ratio should be imposed by the Court. However, this is not a fair comparison," stressed the SEC. "Ripple avoids comparing the Terraform settlement's penalty to the gross profit of the wrongdoing. This ratio (S420 million/S3.587 billion) is considerably higher: 11.7%." The securities watchdog concluded:
Applying this ratio to the $876.3 million in gross profits for which the SEC is seeking disgorgement leads to a significantly higher penalty of $102.6 million, far surpassing Ripple's proposed $10 million cap ... such a minimal penalty would not align with the objectives of civil penalty laws.
What are your views on the SEC's pursuit of a $102.6 million penalty against Ripple? Feel free to share your thoughts in the comments section below.