Ripple SEC v. Terraform appealed the case, arguing for a smaller civil penalty.
Lawyers for blockchain company Ripple have asked the US Securities and Exchange Commission (SEC) to consider an “appropriate” civil penalty in court following the settlement between the regulator and Terraform Labs.
On June 13 in the U.S. District Court for the Southern District of New York, Ripple's legal team filed a notice of supplemental authority calling the SEC's civil penalty “unreasonable,” a settlement in the Terraform case. Before Ripple's filing, a federal judge approved a $4.5 billion settlement between the SEC and Terraform Labs and its co-founder Do Kwon.
The SEC asked Ripple to pay about $2 billion in disgorgement, prejudgment interest and civil penalties, while the blockchain firm argued for a fine of no more than $10-million. Ripple's lawyers made similar arguments in the SEC's respective fines against Block.one, Genesis Global Capital and Telegram, but the filing changed information about the company's total revenue.
“As Ripple's opposition explains, in comparable (and even more serious) cases, the SEC has agreed to civil penalties ranging from 0.6% to 1.8% of the defendant's gross income,” Ripple's lawyers said. “Terraform fits that pattern. Here, by contrast, the SEC seeks civil penalties far beyond that range, even though there was no fraud charge in this case and institutional buyers did not suffer substantial losses. Terraform therefore asserts that the court dismissed the SEC's disproportionate and unprecedented motion and that the appropriate civil penalty would not exceed $10 million.
One of crypto's longest legal battles
After a two-week trial in April, a jury found Kuo and Terraform guilty of fraud. In contrast, Ripple's case with the SEC has been ongoing since December 2020, with the regulator claiming that the blockchain company used XRP (XRP) as an unregistered security to raise funds. The case set a major legal precedent in July 2023 when Judge Annalisa Torres ruled that the XRP token was not a security for programmatic sales.
Related: Ripple aims to launch US dollar stablecoin to compete with USDT and USDC.
The SEC moved to dismiss the case against Ripple CEO Brad Garlinghouse and CEO Chris Larsen in October 2023, saying at the time that it planned to discuss solutions with the blockchain company. Judge Torres originally scheduled the trial between Ripple and the SEC to begin in April, but in October 2023, he adjourned the proceedings without setting a date. At the time of publication, it was unclear when the judge might set a trial date.
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