SEC has asked to reduce the penalty amount for Ripple in the XRP case from $125 million to $50 million

What’s new? The US Securities and Exchange Commission (SEC) and Ripple Labs have jointly asked a Manhattan federal court to unfreeze $125 million the company paid as a fine in a case over the status of the XRP token issued by it.

Source: X.com

What else is known? Under the proposal, Ripple will pay a $50 million civil penalty to the SEC and the remaining funds, which are currently held in an escrow account, will be returned to the company.

The announcement marks an important step in settling a case that has lasted nearly four years and generated widespread industry attention.

The joint motion follows previous attempts by the parties to suspend the ongoing appeals and reach a negotiated settlement. The new request must be approved by US District Judge Analisa Torres.

In late 2020, the SEC accused Ripple of raising $1,3 billion by selling XRP tokens as unregistered securities. Ripple denied wrongdoing and in 2023 secured a partial victory when Judge Torres ruled that programmatic sales of XRP on public exchanges to retail customers were not offerings of securities.

However, the court found violations in the institutional sales.

The SEC then demanded a $2 billion fine, which was reduced to $125 million by the court’s decision. Under the new deal, Ripple and its top executives will pay $50 million and the remaining funds will be returned to the company.

With the arrival of Donald Trump’s administration, crypto lawyer Paul Atkins was appointed SEC chairman, replacing Gary Gensler. Along with this, the SEC relaxed its aggressive crypto regulatory policies that were in place under Joe Biden.

Since then, the SEC has launched a cryptocurrency task force, where it holds roundtables with the industry to develop new regulatory guidelines, and has halted a number of investigations and litigation against crypto firms.

However, in May, Caroline Crenshaw, one of the SEC’s five commissioners, criticized this relaxation of regulation because of potential threats to investors.

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In late May, the SEC formally accepted for review the first application to launch a spot exchange-traded fund (ETF) based on the XRP token from investment firm WisdomTree.