- In response to Ripple’s alleged violations of federal securities laws, the SEC has suggested extraordinary penalties against the company totaling nearly $2 billion.
- In stark contrast to the SEC, Ripple proposes a $10 million fine, citing the SEC’s overreach and unreasonable expectations.
Right now, Ripple Labs is challenging the massive $1.95 billion fine that the U.S. Securities and Exchange Commission (SEC) is proposing in a major legal battle. This legal challenge comes after a New York court determined that Ripple’s institutional sales of its cryptocurrency, XRP, had breached federal securities laws.
Although the court upheld this particular infraction, it rejected additional SEC claims pertaining to XRP sales through algorithms and on exchanges.
The SEC’s Strict Penalties Described
The SEC has suggested penalties totaling nearly $2 billion, which include an astounding $876 million in disgorgement, $198 million in prejudgment interest, and an additional $876 million in civil penalties.
According to Ripple’s defense, this punitive financial measure is unprecedented in digital-asset litigation and exceeds any similar punishment by a factor of more than twenty.
But, in contrast to the SEC’s plan, Ripple is in favor of a penalty that is significantly lower—no more than $10 million, as previously reported by ETHNews.
The legal team for Ripple has harshly denounced the SEC’s requests as an example of excessive administrative power. They contend that the SEC’s strategy presumes complete success and proven irresponsible behavior, neither of which have been established, according to Ripple.
Effect on the Market for XRP
The public’s attention and the continuing legal dispute have not had a significant effect on XRP’s market performance.
As of right now, the price of XRP is approximately $0.5502, down 0.05% from the previous day, according to data from CMC. But with a 9.70% gain over the last week, XRP has shown signs of a bullish trend in the mid-term.
Specifics on Ripple’s revenue from institutional sales and the related tax payments were withheld from the legal documents, which further complicated the financial story. But Ripple argues that it has not received any benefit from these transactions that would require disgorgement, casting doubt on the SEC’s justification for its claims for money.
The verdict in this case will probably have a big impact on Ripple as well as the regulation of the larger cryptocurrency market as it develops.