- The SEC has proposed dramatically reducing Ripple’s penalty from a staggering $2B to a much lower $102.6M.
- This comes after Ripple argued the initial fine was excessive and pointed to a recent SEC settlement for reference.
- Whether Ripple accepts this offer or the legal battle continues remains to be seen.
The legal battle between the SEC and Ripple Labs over XRP sales as unregistered securities took a significant turn on June 14, 2024. Defense lawyer James Filan shared a document revealing a substantial reduction in the SEC’s proposed settlement amount for Ripple.
Ripple Battles $2 Billion SEC Penalty
The initial SEC proposal sought a hefty $2 Billion penalty from Ripple. However, the new filing proposes a significantly reduced settlement sum of $102.6 Million. This development comes just a day after Ripple filed a legal brief arguing that the original $2 Billion penalty was unreasonable.
In its argument, Ripple pointed to the recent Terraform Labs case and past SEC settlements as a basis for a fairer settlement amount. Terraform Labs, the company behind the Luna cryptocurrency, reached a settlement with the SEC for $4.4 Billion on June 13.
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Ripple argued that the SEC typically seeks penalties between 0.6% and 1.8% of the defendant’s revenue in such cases, and proposed a settlement of only $10 Million. The SEC, however, rejected Ripple’s comparison, claiming it was irrelevant to their case.
They clarified that Terraform Labs received a lower penalty due to extenuating circumstances. The SEC highlighted Terraform Labs’ bankruptcy status, their agreement to permanently cease operations, and the burning of all remaining tokens as key factors in their decision.
$102.6 Million Settlement on the Table
According to the SEC filing, “Ripple fails to acknowledge the significant differences between their case and Terraform Labs. Unlike Ripple, Terraform Labs is demonstrably out of business and has agreed to burn all their crypto asset securities, return funds to investors, and remove key personnel involved in the violations.”
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The SEC emphasized that these factors heavily influenced their settlement offer with Terraform Labs and are not applicable to Ripple’s case. They added:
“Ripple is agreeing to none of this relief—in fact, Ripple is agreeing to nothing.”
While significantly lower than the initial proposal, the SEC maintains that the $102.6 Million settlement is necessary to deter future misconduct in the cryptocurrency industry. The outcome of this ongoing legal battle will be closely watched by investors and companies in the crypto space.
On the Flipside
- Accepting the $102.6 million settlement wouldn’t necessarily clarify XRP’s legal status as a security. This lack of a definitive resolution could be a major drawback for Ripple.
- On the other hand, rejecting the settlement could lead to a lengthy court battle with an uncertain outcome, potentially resulting in a much harsher penalty.
Why This Matters
The slashed settlement offer from the SEC for Ripple suggests a potential shift in their negotiation strategy, with the final settlement amount impacting not only Ripple but also setting a precedent for future SEC enforcement actions and how cryptocurrency companies approach security offerings. This could significantly impact the regulatory landscape for cryptocurrency as a whole.
If you’re interested in the legal battle leading up to this settlement, check out this article on Ripple’s fight against the SEC’s penalty using the Terraform Labs case:
Ripple Fights $2B SEC Penalty Using Terraform Labs Case
Want to know more about the $4.5 Billion Settlement the SEC secured against Terraform Labs in its lawsuit case? This article provides the details:
SEC Secures $4.5 Billion Settlement in Landmark Crypto Case
