The U.S. Securities and Exchange Commission (SEC) has adamantly refused to agree with Ripple’s proposal to lower the $2 billion fine in their ongoing legal dispute, claiming that Ripple’s circumstances differ significantly from those of Terraform Labs.
In a June 13 “notice of supplemental authority” filed to a New York district court, Ripple referenced the SEC’s recent settlement with Terraform Labs as precedent, which led to this dispute.
On June 14, the SEC wrote a letter addressed to Analisa Torres, US District Court Judge, stating that the $4.47 billion settlement reached with Terraform Labs and its co-founder Do Knwon, along with a $420 million civil penalty, was reached because the company was bankrupt, had to return investor funds, and had fired executives who were “in charge at the time of the violations.”
The SEC claimed that comparing Ripple to the Terraform settlement blatantly ignores significant distinctions, such as the fact that Terraform is bankrupt, going ‘out of business for good’, destroyed its crypto asset securities, returned investor funds, and has fired two of its top board members.
The SEC stated, “Ripple is agreeing to none of this relief Ripple is agreeing to nothing.”
Ripple’s argument that Terraform’s $420 million civil penalty was around 1.27% of its “$33 billion gross sales” wasn’t an “apples-to-apples comparison,” the SEC said.
According to the SEC, the Terraform penalty is calculated as an 11.7% ratio based on gross profits rather than sales. This means that if Ripple’s gross profits were $876.3 million, the penalty would be $102.6 million, far more than the $10 million that Ripple has proposed. The SEC argued, “That low of a penalty would not satisfy the purposes of the civil penalty statutes.”
The SEC’s proposed penalties for Ripple come to almost $2 billion, including $198.2 million in prejudgment interest, $876.3 million in civil penalties, and an additional $876.3 million in disgorgement.
In a post on X over the weekend, Stuart Alderoty, the chief legal officer at Ripple, reacted negatively to the SEC’s response.
Alderoty stated, “The court gave clarity that XRP is not a security. There are no “victims” to compensate. And worst of all for the SEC, Ripple is thriving. But at least SEC seems to have abandoned its absurd demand for $2B.”
Also Read: Ripple Executive Rips Apart SEC Over Waste of Taxpayers’ Dollars
