The SEC shot down Ripple’s argument for a lower penalty

The United States Securities and Exchange Commission has criticized Ripple Labs' latest argument as insufficient for a lower fine.

Last week, Ripple cited the SEC's settlement with Terraform Labs when it asked New York District Court Judge Annalisa Torres on June 13 for a fine of “no more than $10 million” — far less than the $876.3 million civil penalty proposed by the regulator.

A day later, the SEC agreed in a June 14 letter to Judge Torres that its $4.5 billion settlement with Terraform and co-founder Do Kwon — including a $420 million civil penalty — was broken because the company had agreed to return the money. They fired investors and executives who were “in charge at the time of the breach.”

“Ripple is not agreeing to any of this relief – in fact, Ripple has not agreed to anything.”

Ripple's contention that Terraform's $420 million civil penalty was 1.27% of its “$33 billion in gross sales” was not an “apples-to-apples comparison,” the SEC said.

The SEC added that Terraform's fine, weighted against the “gross profits derived from the infringing conduct,” was more than $3.5 billion — a ratio of nearly 12 percent.

The regulator argued that Ripple's civil penalty would be $102.6 million.

“This minimum penalty does not meet the objectives of the civil penalty statutes,” the SEC said.

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The SEC's proposed penalties to Ripple total nearly $2 billion, including $198.2 million in prejudgment interest, $876.3 million in civil penalties and another $876.3 million in disgorgement.

The pair have been in a court battle since 2020 after the SEC found that Ripple sold unregistered securities, which Judge Torres agreed he did — but only when he sold them to institutional investors.

Last month, the SEC objected to Ripple's bid to close some finances, arguing that the regulator should disclose the proceeds from the sale of XRP (XRP) that Judge Torres did not register.

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