SEC Pursues $102.6 Million Penalty from Ripple, Rejecting $10 Million Proposal

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The SEC seeks a $102.6 million penalty from Ripple, rejecting the company’s $10 million proposal as insufficient to meet civil penalty statutes’ purposes.

Bollywood Fever: The U.S. Securities and Exchange Commission (SEC) is seeking a $102.6 million penalty from Ripple Labs, significantly reducing its initial demand of nearly $2 billion. Ripple had proposed a $10 million penalty, referencing the recent settlement with Terraform Labs. However, the SEC argued that such a low penalty “would not satisfy the purposes of the civil penalty statutes.”

SEC Rejects Ripple’s $10 Million Proposal

Ripple’s request for a reduced penalty in the ongoing XRP case was met with firm opposition from the SEC. Ripple drew parallels to the Terraform Labs settlement, suggesting a penalty of $10 million. In response, the SEC explained to District Judge Analisa Torres in a June 14 letter that Ripple’s comparison was flawed.

SEC’s Argument

The SEC highlighted significant differences between the Ripple case and the Terraform Labs settlement. The regulator noted that Terraform Labs is in bankruptcy and agreed to cease operations permanently. Terraform also committed to burning “the keys to all of its crypto asset securities,” returning a substantial amount to investors, and removing board members involved in the violations.

Conversely, Ripple has not agreed to any similar relief. The SEC emphasized that Ripple continues to profit from its conduct and has not acknowledged any violation of securities laws.

Discrepancy in Penalty Calculation

The SEC criticized Ripple’s comparison of the Terraform penalty to gross sales, noting that a more accurate comparison would be to gross profits. The SEC pointed out that the penalty ratio for Terraform was 11.7% of gross profits, which would translate to a much larger penalty for Ripple.

SEC’s Conclusion

The SEC concluded that applying the same ratio to Ripple’s $876.3 million in gross profits justifies a $102.6 million penalty, far exceeding Ripple’s proposed $10 million. The regulator asserted that a $10 million penalty would be insufficient to meet the objectives of the civil penalty statutes, which aim to punish and deter violations.

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