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Ripple opposes the SEC’s $2 billion fine by citing the Terra settlement as precedent
Ripple Labs has formally requested a reduction in the proposed $2 billion fine from the US Securities and Exchange Commission (SEC).
The company, which was engaged in a long legal battle with the SEC, argues that the proposed fines are disproportionate. In a “notice of supplemental authority” issued Thursday, Ripple argues that his fine should be closer to $10 million, drawing comparisons to recent fines imposed on Terraform Labs.
Comparison with the Terraform Labs settlement
Ripple’s legal team is taking advantage of the recent settlement between the SEC and Terraforming laboratories to support their cause. On Wednesday, Terraform agreed to pay $4.47 billion in fines, a deal later approved by a judge. Ripple’s notice highlights the discrepancy between the proposed $2 billion penalty and the fines imposed on Terraform, which they say involve more serious charges.
Ripple’s lawyers stated:
“The civil penalty sought by the SEC in the Terraform case demonstrates the unreasonableness of the civil penalty sought by the SEC in this case.”
Furthermore, they highlighted that in similar or more severe cases, the SEC has imposed penalties ranging from 0.6% to 1.8% of the defendant’s gross revenues, suggesting that Terraform’s settlement fits this pattern.
No allegations of fraud
Ripple’s defense also differentiates its case from Terraform’s by emphasizing the absence of fraud allegations. THE The SEC’s case against Terraform including a jury’s decision in April that Terraform Labs and its cofounder, Do Kwon, were engaged in civil fraud. Ripple emphasizes that no such allegations exist in his case and that institutional buyers of XRP did not suffer substantial losses.
“In this case, by contrast, the SEC is seeking a civil penalty that far exceeds that range, even though there are no allegations of fraud in this case and institutional buyers did not suffer substantial losses,” Ripple lawyers said .
This comparison is a critical element of Ripple’s argument for a reduced fine, positioning the company’s circumstances as less severe than those involving Terraform.
The SEC and Ripple have been involved in legal proceedings for several years. The SEC accused Ripple of raising $1.3 billion through the sale of XRP, which it claims is an unregistered security. Last year, Judge Analisa Torres of New York ruled that some of Ripple’s XRP sales, called programmatic, did not violate securities laws due to a blind bidding process. However, she also ruled that other direct sales of the token to institutional investors qualify as securities.
Despite being at the trial stage, the legal battle could drag on for years due to the complexity of the process and possible delays and appeals on both sides. According to Brad Garlinghouse, CEO of Ripple, the resolution could happen as early as this summer.
“My estimate is before the end of the summer. Someone asked me if it is the end of August, but I specified that September 21st is the end of summer”, he said. said recently.
Possible resolutions and market reactions
Another person who believes the case could officially close in the next few months is U.S. attorney Jeremy Hogan.
He expected compensation of 100 million dollars,
“I’m saying the judge will order disgorgement 0 but will throw the SEC a bone and order Ripple to pay a $100 million fine.”
Some may view the SEC as the underdog in the lawsuit, considering the company’s three partial court victories throughout 2023. XRP’s price has reacted positively after each triumph, meaning a decisive victory could once again cause a substantial rally.