SEC challenges Ripple’s argument to reduce its fine for selling XRP tokens to $10 million
The regulator is seeking $2 billion for violating securities laws for selling the cryptocurrency to institutional investors
17.06.2024 - 08:55
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2 min
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What’s new? The US Securities and Exchange Commission (SEC) has criticized fintech company Ripple’s attempt to challenge a demand for a $2 billion fine in a proceeding over the status of the XRP token it developed. Ripple is asking the court to reduce the fine to $10 million, but the SEC believes that such a fine amount does not comply with the law on penalties for civil actions.
What else is known? In its petition, Ripple cited the SEC’s settlement agreement with the accused fraudulent blockchain company Terraform Labs (TFL) and its founder Do Kwon, under which the defendants will pay $4,5 billion, including a $420 million fine.
SEC officials responded by saying that the settlement agreement was reached due to the company’s own proactive actions, such as going through bankruptcy proceedings, agreeing to return money to investors, and firing responsible senior executives.
Officials added that Ripple, in turn, “is agreeing to none of this relief — in fact, Ripple is agreeing to nothing.”
Ripple also argued that the direct amount of the civil penalty for TFL falls within the SEC’s standard range of 0,6% to 1,8% of the accused company’s gross revenue (in the TFL case, it is 1,27%). However, the SEC responded that even in this case, the fine for Ripple could not have been just $10 million.
Thus, applying a similar ratio, the fine for Ripple would be $102,6 million, while the SEC is asking for $876,3 million.
The fine relates to a court ruling in a case that has been ongoing since 2020. The SEC accused Ripple of raising $1,3 billion by selling unregistered securities in the form of XRP tokens. Last year, the court ruled that only direct institutional sales violated the law while selling to retail investors through exchanges is not a violation.
Ripple insists that the amount of the fine is too high, given that investors suffered no losses and the company itself, unlike TFL, was not accused of fraud.
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