The US Securities and Exchange Commission (SEC) moved one step ahead in the legal battle with Ripple. The commission responded to the defendant’s letter regarding the TerraForm Labs Consent Judgment.

Is the SEC making a comeback?

In the letter, Ripple argues that it supports its opposition to the SEC’s remedies motion. It noted that Ripple is inapt to cite settlements. This is because parties choose to settle cases for any number of reasons. However, settlements are of limited value in determining remedies in a litigated context.

SEC stated that Ripple failed to note that the corporate defendant there is in bankruptcy in asking the Court to tether its penalty determination in this case to the settlement in Terraform.

The commission took several factors in agreeing to a settlement and repeatedly cited them as the facts relevant for the court to approve the settlement under applicable law, it added.

The letter mentioned that Ripple is agreeing to none of this relief-in fact, they are agreeing to nothing. The commission stated that in the SEC’s remedies reply brief in this case, resolutions, where cash-strapped defendants agree to return funds to victims quickly and voluntarily agree to cease their violative conduct.

It added that they are unhelpful in deciding the amount of penalties necessary to punish and deter an undisputedly wealthy defendant who fails to recognize or acknowledge its violation of the securities laws. It added that who continues to enrich itself by engaging in conduct awfully similar to the conduct that resulted in the violation in the first place.

Will there be a settlement?

The SEC wrote that Ripple is comparing the size of the Terraform penalty to the amount of that defendant’s “gross sales.” They are arguing the Court should impose the same (1.27%) ratio. 

The watchdog stated that it’s not an apples-to-apples comparison. Ripple avoids comparing the Terraform settlement’s penalty to the gross profit of the violative conduct. That ratio ($420 million/$3.587 billion) is higher: 11.7%. 

As per argument, applying it to the $876.3 million in gross profits the SEC here asks the Court to disgorge results in a much larger figure, a $102.6 million penalty, than the $10 million ceiling Ripple insists.

It ended by stating the reasons previously set forth that low of a penalty would not satisfy the purposes of the civil penalty statutes.