The long-standing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has taken a new turn, with the SEC seeking a massive $1.95 billion fine against the fintech company.
The case, which began in December 2020, revolves around the SEC’s allegations that Ripple Labs and its executives violated federal securities laws by selling XRP, the sixth-largest cryptocurrency by market cap, to both institutional and retail customers.
TLDR
The U.S. Securities and Exchange Commission (SEC) has asked a New York judge to impose a fine of $1.95 billion on Ripple Labs.
The proposed fine consists of $876 million in disgorgement, $198 million in prejudgment interest, and $876 million civil penalty.
The SEC filed suit against Ripple Labs and its executives in December 2020, alleging violations of federal securities laws through the sale of XRP.
In July 2023, a judge ruled that only Ripple’s institutional sales of XRP violated U.S. law, not the sale of XRP on exchanges and through algorithms.
Ripple’s chief legal officer, Stuart Alderoty, criticized the SEC and announced that the company will file its response to the SEC’s motion in April 2024.
According to court filings, the SEC has asked a New York judge to impose a fine consisting of $876 million in disgorgement, $198 million in prejudgment interest, and an additional $876 million civil penalty. The total fine amounts to a staggering $1.95 billion, a figure that has drawn criticism from Ripple Labs’ chief legal officer, Stuart Alderoty.
In a preemptive announcement on social media, Alderoty revealed the SEC’s intention to seek such a substantial fine and expressed his disapproval of the regulator’s actions. He accused the SEC of making false and misleading statements designed to punish and intimidate Ripple and the broader crypto industry. Alderoty also announced that Ripple Labs would file its response to the SEC’s motion in April 2024.
As you will see when the SEC’s brief is made public tomorrow, they ask the Judge for $2B in fines and penalties. 1/4 https://t.co/HM8dBbn7lp
— Stuart Alderoty (@s_alderoty) March 25, 2024
The ongoing legal battle between Ripple Labs and the SEC has been closely watched by the cryptocurrency community, as the outcome could have significant implications for the industry as a whole.
In July 2023, Ripple scored a partial victory when Judge Analisa Torres ruled that the sale of XRP on exchanges and through algorithms did not violate U.S. law. However, the judge also determined that Ripple’s institutional sales of XRP, amounting to $728 million worth of contracts, constituted unregistered securities sales.
Despite this mixed ruling, Ripple Labs and its investors interpreted the decision as a positive development for the crypto industry. The case has highlighted the ongoing debate surrounding the classification of cryptocurrencies as securities and the need for clearer regulatory guidance in the space.
The SEC’s latest move to seek a $1.95 billion fine against Ripple Labs has once again brought the case into the spotlight. The substantial sum sought by the regulator has raised questions about the proportionality of the fine and its potential impact on the company and the broader crypto market.
As the legal battle continues, the crypto community eagerly awaits the outcome of this high-stakes case. The resolution of the Ripple Labs lawsuit could set a precedent for how cryptocurrencies are regulated in the United States and may influence the approach taken by other regulatory bodies worldwide.
The case also underscores the ongoing tensions between the crypto industry and regulatory authorities, with many in the space calling for clearer guidelines and a more collaborative approach to regulation.
As the SEC continues to target major crypto exchanges and lenders with lawsuits alleging the sale of unregistered securities, the industry remains in a state of uncertainty.
The post SEC Proposes $1.95B Fine in Ripple Lawsuit: Ripple’s Chief Legal Officer Slams SEC’s “False & Misleading” Statements appeared first on Blockonomi.