The SEC has been pursuing a case against Ripple since Dec. 2020, alleging that the firm used XRP as an unregistered security to raise funds.
Following a settlement between the SEC and Terraform Labs, lawyers for blockchain firm Ripple have requested that a court consider an “appropriate” civil sanction 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 magistrate approved 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.
“As Ripple’s opposition explained, in comparable (and even in more egregious) cases, the SEC has agreed to civil penalties ranging from 0.6% to 1.8% of the defendant’s gross revenues,”, Lawyers further stated:
“Terraform fits that pattern. Here, by contrast, the SEC seeks a civil penalty far exceeding that range, even though there are no allegations of fraud in this case and Institutional Buyers did not suffer substantial losses. Terraform thus confirms that the Court should reject the SEC’s disproportionate and unprecedented request and that an appropriate civil penalty would be no more than $10 million.”
Crypto’s Longest Legal Battle
Kwon and Terraform were convicted guilty of fraud by a jury following a two-week trial in April. 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 utilized XRP.
To raise funds as an unregistered security. In July 2023, Judge Analisa Torres decided that the XRP token was not a security about 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 stated that it 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.
