A significant ruling has emerged from a prolonged legal battle between Ripple and the Securities and Exchange Commission (SEC). A federal judge has ordered Ripple to pay a $125 million fine after determining that the company's institutional sales of XRP violated federal securities laws.
Judicial Ruling on XRP Sales
In her ruling, District Judge Analisa Torres of the Southern District of New York underscored her previous stance that Ripple's programmatic sales of XRP to retail clients via exchanges did not breach federal securities laws. However, she found that Ripple's direct institutional sales did constitute a violation.
Details of the Penalty
The $125 million civil penalty imposed by Judge Torres is significantly lower than the SEC's original demand. The SEC had sought $1 billion in disgorgement and prejudgment interest, alongside a $900 million civil penalty. The fine was levied following Judge Torres's finding that 1,278 institutional sale transactions conducted by Ripple contravened securities law.
Injunction Against Future Violations
In addition to the monetary penalty, Judge Torres issued an injunction preventing Ripple from future violations of federal securities laws. She expressed concerns about Ripple's potential to "cross the line" in the future, justifying the necessity of the injunction. The order mandates that Ripple must file a registration statement if it intends to sell any securities in the future.
Background and SEC Appeal
This ruling follows a July 2023 decision in which Judge Torres concluded that while Ripple's institutional sales violated securities laws, the programmatic sales to retail clients did not. The SEC's attempt to appeal this part of the ruling during the case was unsuccessful.
Following the judgment, the SEC is expected to appeal the July 2023 decision now that the sentence has been imposed. Previously, the SEC and Ripple had settled charges related to CEO Brad Garlinghouse and other executives after an interlocutory appeal was denied.
Market Reaction
The market reacted to the judgment with a slight increase in the price of XRP, which rose by 3 cents, or approximately 2%, after the publication of the judgment.
This ruling marks a significant development in the ongoing legal scrutiny of Ripple and its practices, setting a precedent for how similar cases might be handled in the future.
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