šSEC shoots down Rippleās argument for a lower penalty
The United States Securities and Exchange Commission (SEC) has criticized Ripple Labsā latest argument for a lower penalty, saying it wouldnāt be enough.
On June 13, Ripple cited the SECās settlement with Terraform Labs when it again asked Judge Analisa Torres of the United States District Court for the Southern District of New York for a penalty of āno more than $10 millionā ā far lower than the regulatorās proposed $876.3M civil penalty.
A day later, the SEC argued in a June 14 letter to Torres that its $4.5B settlement with Terraform Labs and its co-founder Do Kwon ā inclusive of a $420M civil penalty ā was made as the firm is bankrupt, agreed to return money to investors and fired leaders āin charge at the time of the violations.ā
āRipple is agreeing to none of this relief ā in fact, Ripple is agreeing to nothing.ā
Rippleās argument that Terraformās $420M civil penalty was around 1.27% of its ā$33B gross salesā wasnāt an āapples-to-apples comparison,ā the SEC said.
The SEC added it measured Terraformās penalty against āthe gross profit of the violative conduct,ā which it pinned at over $3.5B ā a nearly 12% ratio.
The regulator argued Rippleās civil penalty would be $102.6M if the same ratio were applied to the $876.3M of Rippleās gross profits it asked to disgorge.
āThat low of a penalty would not satisfy the purposes of the civil penalty statutes,ā the SEC said.
The SECās proposed penalties for Ripple total nearly $2B, which includes $198.2M in prejudgment interest, $876.3M in civil penalty and another $876.3M in disgorgement.
The pair have been in their court fight since 2020 when the SEC claimed Ripple sold unregistered securities, which Torres agreed it did in a July 2023 ruling ā but only when sold to institutional investors.
In May, the SEC objected to Rippleās bid to seal some of its finances, with the regulator arguing the firm should disclose the revenue it made from XRP sales that Torres ruled were unregistered.