Ripple Seeks Reduction in SEC Fine References Terra Settlement in Latest Filing

Ripple has referenced Terra’s recent consent judgment in a new filing in the SEC case, arguing for a $10 million fine instead of the SEC’s proposed $2 billion penalty.
In a supplemental filing submitted in the Southern District of New York, Ripple pointed to the recent Consent Judgment in the TerraForm Labs (TFL) case, where the SEC agreed to disgorgement of over $3.58 billion and a civil penalty of $420 million.
Ripple compared the civil penalty in the TFL case to the SEC’s proposed fine, highlighting that the penalty in the TFL lawsuit represented 1.27% of the defendants’ gross sales, totaling $33 billion. This is in contrast to the $2 billion proposed fine following the sale of XRP to institutional investors.
The TFL case involved one of the largest securities frauds in U.S. history, with two massive fraudulent schemes leading to the loss of $40 billion in investors’ funds. Ripple emphasized that TFL executives used fictitious data to attract investors while engaging in fraudulent practices to support the token’s price.
Ripple also noted that the SEC typically requests a civil penalty between 0.6% and 1.8% in similar cases, but in its case, the SEC requested a significantly higher penalty despite no evidence of fraud and no losses incurred by institutional investors.
The filing has generated reactions from the crypto community, with top lawyers highlighting its importance. Pro-XRP lawyer Bill Morgan criticized the SEC’s behavior towards Ripple, calling it ill-motivated. Former securities lawyer Marc Fagel suggested that the SEC’s leniency in the TerraForm case was due to the settlement status and questioned the likelihood of the SEC receiving the requested amount.
CryptoQuant CEO Ki Young Ju raised concerns about TerraForm Labs’ ability to settle with the SEC, given its previous financial challenges. Meanwhile, in the ongoing SEC v. Ripple lawsuit, the parties are awaiting the court’s final verdict, with Ripple contending that the civil penalty should not exceed $10 million.
Ripple CEO Brad Garlinghouse estimated that the court’s final verdict could be issued before September 21, but it remains to be seen if this projection will hold true. As always, readers are advised to conduct thorough research before making any investment decisions.