The long stretched legal battle between the US Securities and Exchange Commission (SEC) and crypto exchange Ripple Labs has intensified. The SEC has rebuffed Ripple’s latest attempt to reduce its fines on 17 June 2024.
On 13 June 2024, Ripple filed a “notice of supplemental authority” with a New York district court, citing the SEC’s settlement with Terraform Labs as a precedent for reducing its own fines.
According to Ripple, the $2 billion fine that the SEC proposed for selling XRP to institutional investors was excessive in comparison to the sanctions imposed on Terraform Labs.
However, the SEC has responded by saying that the comparison to Terraform Labs was not valid due to significant differences in the circumstances of the two cases.
Recently, 2018-founded Terraform Labs agreed to pay approximately $4.5 billion as part of its settlement with the SEC.
EXPLORE: What is Ripple (XRP)? A complete beginner’s guide
The legal battle between Ripple and the SEC has been ongoing since December 2020, when the SEC filed a lawsuit against Ripple.
The SEC alleged Ripple had raised $1.3 billion through the sale of XRP, which it claimed was an unregistered security.
Ripple Argues That Penalty Shouldn’t Exceed $10 million
Suggesting that civil penalty should not exceed $10 million, Ripple said that its case did not involve allegations of fraud.
Ripple’s Chief Legal Officer, Stuart Alderoty, emphasized that the court had clarified that XRP is not a security. It means that there were no victims to compensate. He also noted that Ripple is thriving despite the ongoing legal battle
Ripple further argued that the penalty should be calculated based on the ratio of the fine to the gross sales of the violative conduct.
In the case of Terraform, this ratio was approximately 1.27%. Applying the same ratio to Ripple’s case would result in a significantly lower fine.
The SEC’s proposed penalties for Ripple include $198.2 million in prejudgment interest, $876.3 million in civil penalties, and another $876.3 million in disgorgement, totaling nearly $2 billion.
Terraform Labs: Largest Securities Frauds In US History ?
Terraform Labs was fined after the jury found the company and its co-founder Do Kwon liable for the Terra ecosystem collapse, which resulted in $40 billion in investor assets being erased.
Commenting on the Terraform verdict, SEC Chair Gary Gensler said, “Terraform and Kwon’s fraudulent activities caused devastating losses for investors, in some cases wiping out entire life savings.
Terraform Labs PTE, Ltd. & Do Kwon agreed to pay more than $4.5B following a unanimous jury verdict holding them liable for orchestrating a years-long fraud involving crypto asset securities that led to massive investor losses when the scheme unraveled. https://t.co/B5IeUcu7Gh pic.twitter.com/pHPrzHCB6j
— U.S. Securities and Exchange Commission (@SECGov) June 14, 2024
“Their fraud serves as a reminder that, when firms fail to comply with the law, investors get hurt,” Gensler added.
“Terraform and Kwon fought our efforts to investigate – taking a fight over investigative subpoenas all the way to the Supreme Court,” said Gensler. “Thankfully, with this settlement, the victims of their massive fraud will now get some justice.”
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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