In a recent update, Stuart Alderoty sheds light on the latest development in the Ripple case, highlighting the SEC’s apparent shift in its stance on the demand for nearly $2 billion in penalties.
The Chief Legal Officer (CLO) of Ripple took to X post over the weekend to reveal that the securities regulator has now dropped its ‘absurd’ request for $2 billion.
SEC’s Request in Ripple Case
Back on March 22, the SEC had initially asked for almost $2 billion in fines from Ripple for its alleged violation of federal securities laws stemming from the unregistered sales of XRP to institutional investors. The proposed fine included a civil penalty of $876.3 million, disgorgement of $876.3 million, and prejudgment interest of $198.15 million, totaling $1.95 billion.
Despite Ripple’s initial opposition to the demand, the company recently cited the Consent Judgment in the TerraForm Labs’ (TFL) case as precedent, suggesting a reduced penalty of $10 million instead of the SEC’s hefty $2 billion proposal.
In the TFL lawsuit, the defendants agreed to pay a total of over $4 billion, including a $420 million civil penalty and a $3.587 billion disgorgement.
Ripple argued that the civil penalty in the TFL case represents only 1.27% of the company’s $33 billion gross sales, significantly lower than the SEC’s requested amount in their case.
Possible Reduction in SEC’s Demand
However, the SEC refuted Ripple’s comparison with the TFL case, pointing out that the ratio between the civil penalty and disgorgement in the TFL lawsuit equates to 11.7%. By applying the same ratio to the $876.3 million disgorgement sought by the SEC, Ripple could potentially face a reduced civil penalty of $102.6 million, bringing the total demand down from nearly $2 billion to $1,177,050,000 ($1.17 billion).
Alderoty Responds to SEC’s Arguments
Alderoty also addressed some of the arguments raised in the SEC’s recent brief. He emphasized that Ripple has vehemently defended itself against the SEC’s allegations, asserting that XRP has been declared a non-security by the court. Additionally, Alderoty highlighted that there are no victims in the Ripple case requiring compensation and noted that Ripple continues to operate successfully despite the ongoing legal battle.
As the parties eagerly await the court’s final decision, Ripple CEO Brad Garlinghouse estimated that a verdict could be reached before the end of summer 2024.
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