SEC Firmly Opposes Ripple's Request to Lower Fine

The U.S. Securities and Exchange Commission (SEC) strongly opposes Ripple Labs' latest request to reduce the fine, arguing that the proposed amount is insufficient to achieve the necessary punitive effect.

Ripple Labs criticizes SEC for the $2 billion fine, citing the Terraform settlement as an example: a $10 million fine would suffice.

Ripple's CEO unveils $RLUSD stablecoin and XRPL EVM sidechain at the XRPL community summit.

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Ripple's Request to Reduce Fine Hits Roadblock

Referencing the Terraform Labs Case
Last week, Ripple cited the settlement agreement between the SEC and Terraform Labs, once again requesting New York District Court Judge Analisa Torres to limit the fine to no more than $10 million, significantly lower than the regulatory agency's proposed $876.3 million civil penalty.

SEC's Rebuttal
However, in a letter to Judge Torres on June 14, the SEC countered that the $420 million civil penalty included in the $4.5 billion settlement agreement reached with Terraform and its co-founder Do Kwon was mainly due to the company's bankruptcy, agreeing to return funds to investors and dismissing "the leaders responsible for the misconduct at the time it occurred."

The SEC stated: "Ripple does not agree to any of these remedies. In fact, Ripple disagrees with everything."

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Uncomparable Penalty Ratios

SEC's Explanation

The SEC further noted that Ripple's assertion that Terraform's $420 million civil penalty amounted to "1.27% of its $33 billion total sales" was not a "comparable figure."

SEC's Calculation: Profits from Violations

The regulatory agency indicated that the basis for calculating Terraform's fine was the "total profits from the violations," estimated at around $3.5 billion, resulting in a penalty ratio of close to 12%.

Ripple's Fine Comparatively Inadequate

The SEC contended that if the same ratio were applied to Ripple's $876.3 million total profits, the fine would be $102.6 million. "Such a low fine would not achieve the purpose of civil penalty laws," the SEC stated.

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SEC Suggests Higher Fine

SEC's Proposed Fine

The SEC proposed a total fine of nearly $2 billion for Ripple, including $198.2 million in prejudgment interest, $876.3 million in civil penalties, and an additional $876.3 million in disgorgement.

Legal Dispute Ongoing Since 2020

Since 2020, Ripple and the SEC have been battling in court, with the SEC previously accusing Ripple of selling unregistered securities, a claim Judge Torres agreed was targeted only at institutional investors.

Read the XRP court documents to understand why XRP and the crypto industry have not escaped securities risks

Dispute over Financial Transparency

Last month, the SEC opposed Ripple's request to seal some of its financial data, arguing that the company should disclose the revenue it garnered from XRP sales, as Judge Torres ruled these sales as unregistered securities.