Ripple is contesting the hefty fine proposed by the U.S. Securities and Exchange Commission (SEC) in their ongoing legal battle. The SEC is seeking an approximately $2 billion penalty against Ripple for selling XRP as an unregistered security to institutions. However, Ripple argues that this penalty is excessive and proposes a significantly lower amount.
In a recent filing submitted to the Southern District of New York, Ripple references the SEC’s settlement agreement with TerraForm Labs as justification for a more lenient penalty in its case. The TerraForm Labs settlement involved a disgorgement of over $3.58 billion and a civil penalty of $420 million.
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Ripple emphasizes the disparity between the SEC’s proposed fine for them and the penalty imposed on TerraForm Labs. The TerraForm Labs penalty of $420 million translates to roughly 1.27% of their $33 billion gross sales. In contrast, the SEC seeks a $2 billion fine from Ripple for XRP sales to institutional investors, with no evidence of fraud or investor losses.
Furthermore, Ripple highlights that the TerraForm Labs case involved one of the largest securities frauds in U.S. history. TerraForm Labs executives were accused of creating and promoting fraudulent schemes that resulted in billions of dollars in investor losses. This misconduct stands in stark contrast to the allegations against Ripple.
Experts Defend Ripple
Industry experts have also weighed in on the significance of Ripple’s filing. Bill Morgan, a prominent attorney and well-respected figure in the crypto community, echoed Ripple’s argument that the SEC typically pursues civil penalties within a range of 0.6% to 1.8% of the defendant’s gross revenue in similar cases. The SEC’s proposed $2 billion fine significantly exceeds this established range.
Morgan contends that the SEC’s excessive fine proposal stems from an unfounded hostility towards the company. In July 2023, the court determined that Ripple’s non-institutional XRP sales did not constitute unregistered securities, and the company has argued that no investors suffered financial losses.
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However, legal experts like Marc Fagel offer alternative perspectives. Fagel argues that the TerraForm Labs settlement, with its hefty penalty, might not be a fair comparison due to its negotiated nature. He suggests that the amount collected from TerraForm Labs could be significantly lower than the agreed-upon figure because both parties settled.
Additionally, CryptoQuant’s CEO raised questions about TerraForm Labs’s ability to pay the settlement, a sentiment Fagel echoed, highlighting that the money in the TerraForm Labs case is gone.
Ripple maintains that a $10 million penalty would be more appropriate. Both parties have submitted their arguments, and the court is expected to deliver a final verdict soon.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Times Tabloid is not responsible for any financial losses.
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