Ripple has requested that a court consider an “appropriate” civil penalty in their lawsuit against the United States Securities and Exchange Commission (SEC).
In a June 13 filing in the U.S. District Court for the Southern District of New York, Ripple’s legal team submitted a notice of supplemental authority that alleged the “unreasonableness” of the SEC’s civil penalty.
The legal team cited a settlement with Terraform. A federal judge had already granted a $4.5-billion agreement between the SEC and Terraform Labs and its co-founder Do Kwon before Ripple’s filing.
Ripple has argued for a penalty of no more than $10 million, while the SEC has requested that the blockchain firm pay approximately $2 billion in disgorgement, prejudgement interest, and civil penalties.
The SEC’s penalties against Block.one, Genesis Global Capital, and Telegram were the subject of similar arguments by Ripple’s attorneys. However, the filing concealed information regarding the firm’s gross revenue.
The lawyers for Ripple stated that the SEC has agreed to civil penalties varying from 0.6% to 1.8% of the defendant’s gross revenues in comparable (and even more egregious) cases, as Ripple’s opposition explained.
“Terraform corresponds to that pattern.” In this instance, the SEC, in contrast, is seeking a civil penalty that exceeds the range mentioned above, even though Institutional Buyers did not sustain substantial losses and there are no allegations of fraud.
Terraform thereby affirms that the Court should reject the SEC’s disproportionate and unprecedented request and that a civil penalty of no more than $10 million would be appropriate.
Ripple-SEC Case
After a two-week trial in April, a jury found Kwon and Terraform liable for fraud. In contrast, Ripple’s dispute with the Securities and Exchange Commission (SEC) has been ongoing since December 2020, when the regulator claimed that the blockchain company had employed XRP as an unregistered security to raise capital.
In July 2023, Judge Analisa Torres decided that the XRP token was not a security concerning programmatic exchange transactions, thereby setting a significant legal precedent.
The SEC filed a motion to dismiss its case against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen in October 2023. At the time, the SEC intended to discuss potential remedies with the blockchain firm.
The trial between Ripple and the SEC was initially scheduled to commence in April, but Judge Torres adjourned the proceeding in October 2023 without a designated date for resumption. At the time of publication, the judge’s ability to establish a trial date is uncertain.
