- Judge Analisa Torres found no securities law violations in some of Ripple’s sales, differentiating types of transactions.
- Ripple revises its sales practices and contract terms following court rulings, aiming to prevent future legal issues.
Ripple Labs has countered a Securities and Exchange Commission (SEC) proposal for the company to incur fines totaling nearly $2 billion, suggesting a more appropriate penalty would be around $10 million. This legal challenge arises from the SEC’s claim that Ripple engaged in sales of XRP, a cryptocurrency, which it classified as unregistered securities.
Last month, the SEC advocated for substantial penalties based on Ripple’s institutional sales of XRP, claiming these actions required severe financial consequences. In response, Ripple submitted a legal document arguing that the proposed fines are disproportionately large and represent an undue aggressive stance against the crypto industry.
Related: Bitcoin and Ripple (XRP) in Crosshairs: US Greenlights 702 Surveillance Bill
Stuart Alderoty, Ripple’s Chief Legal Officer, stated on social media that the severity of the SEC’s demands did not reflect the factual nature of the case, which involved no allegations or findings of reckless or fraudulent behavior.
Our opposition to the SEC’s request for $2B in penalties for legacy institutional sales is now public. In a case that had no allegations (or findings) of recklessness or fraud, and in which Ripple won on significant issues, the SEC’s ask is just more evidence of its ongoing… https://t.co/GLcdsyInZW
— Stuart Alderoty (@s_alderoty) April 23, 2024
The contention traces back to an earlier SEC allegation that Ripple raised $1.3 billion through what the SEC deemed were unregistered securities offerings. However, Judge Analisa Torres differentiated last year between Ripple’s programmatic sales and its direct sales to institutional investors, finding no securities law violations in some of Ripple’s sales.
In defense, Ripple noted modifications to its sales practices following the court’s previous decisions, changing how it conducts XRP sales and the terms of its contracts to preclude future legal issues.
Read more: Deadline Day: Ripple Set to File Opposition Brief in SEC Legal Battle
The SEC’s recent financial penalty proposal included disgorgement and civil penalties that summed to almost $2 billion. Ripple has contested the need for disgorgement and argued that the calculation of prejudgment interest was flawed, advocating for a maximum civil penalty of $10 million.
Ripple asserts that its sales involved transparent transactions with knowledgeable participants and denies any deceptive practices. The company expressed confidence in a fair judgment in the upcoming final remedies phase of the case, while the SEC has not yet responded to Ripple’s latest legal arguments.
