SEC Responds Strongly to Ripple in Terraform Labs Citation

Ripple Labs and the SEC are at odds over a settlement amount in the ongoing lawsuit concerning XRP sales.

Gary Gensler showing a cheque for $2B with a big smile on his face.
Created by Gabor Kovacs from DailyCoin
  • The SEC and Ripple Labs have been locked in a heated battle over a massive fine.
  • Ripple has recently argued that a recent SEC settlement in a separate lawsuit has set a lower bar for fines.
  • The SEC has defended its proposed penalty, citing key differences in the two cases.

The legal battle between Ripple Labs and the Securities and Exchange Commission (SEC) continues to heat up as the two parties clash over the appropriate settlement amount. This comes after Ripple argued that the SEC’s proposed fine was excessive, pointing to a recent settlement with another crypto firm.

SEC Seeks $2 Billion From Ripple in XRP Lawsuit

The SEC filed a lawsuit against Ripple in December 2020, alleging that the company’s sale of XRP, its native cryptocurrency, constituted an unregistered security offering. The SEC is seeking a hefty $2 billion settlement for this alleged violation. Ripple, however, has vehemently contested both the charges and the proposed fine. 


The company believes the SEC’s demands are unreasonable, especially compared to the SEC’s recent settlement with Terraform Labs, the company behind the algorithmic stablecoin TerraUSD (UST), which collapsed in spectacular fashion in 2022. 

In Ripple’s view, the Terraform case involved a situation with far more egregious consequences for investors. The collapse of UST, a stablecoin that was supposed to be pegged to the US dollar, resulted in significant financial losses for many users who held the token. 

Conversely, Ripple argues that XRP investors haven’t experienced any such losses. Based on this comparison, Ripple believes its fine should be substantially lower, proposing a figure of only $10 million.

SEC Defends Settlement Amount in Ripple Lawsuit 

The SEC, in its latest response, defended its proposed settlement amount. The regulator argued that settlements are determined on a case-by-case basis, taking into account various factors. While acknowledging an average settlement rate of 1.27% of sales proceeds, the SEC explained that the Terraform case was unique.

According to the SEC, Terraform Labs’ current state of bankruptcy significantly limited their ability to pay a higher fine. Additionally, the SEC highlighted that Terraform agreed to cease the activities that led to the violation, a step Ripple has yet to take.


With both parties presenting their arguments, a court decision on the appropriate settlement amount remains pending. This decision will not only impact Ripple but could also set a precedent for future SEC settlements involving cryptocurrency firms.

In the meantime, Ripple has continued to expand its business operations, including a stablecoin update and a partnership with Archax, a digital asset security firm. The ultimate outcome of the lawsuit is likely to have significant ramifications for the cryptocurrency industry as a whole.

On the Flipside

  • The SEC may emphasize Terraform’s bankruptcy as a key factor in the lower settlement, suggesting Ripple’s financial resources allow for a steeper penalty.
  • The judge’s decision might not set a definitive precedent for future settlements, leaving room for the SEC to consider specific circumstances in each case.
  • Despite the lawsuit, Ripple’s ongoing business activities, including partnerships, suggest confidence in its legal position.

Why This Matters

The Ripple vs SEC lawsuit isn’t just about one company’s fine, it could define how the SEC regulates cryptocurrency sales in the future. A court-determined settlement amount will set a precedent for how harshly the SEC punishes similar actions by other crypto firms, potentially impacting valuations and market stability.

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

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.