The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) heats up as the SEC requests a hefty $1.95 billion fine from the blockchain company.
SEC Seeks Disgorgement, Interest, and Penalties
According to court filings unsealed on March 26, 2024, the SEC is asking a New York judge to impose a total fine of $1.95 billion on Ripple Labs. This includes:
- $876 million in disgorgement: This refers to the amount of money the SEC believes Ripple earned through illegal sales of XRP.
- $198 million in prejudgment interest: This represents the interest accrued on the disgorgement amount since the lawsuit began in December 2020.
- $876 million civil penalty: This is a separate fine meant to punish Ripple for its alleged violations.
The SEC alleges that Ripple’s sale of XRP constituted unregistered securities offerings. However, a court ruling last July found that XRP sales on exchanges and through algorithms were not illegal. Only Ripple’s direct institutional sales were deemed to be security offerings.
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Ripple Vows to Fight Back
Stuart Alderoty, Ripple’s Chief Legal Officer, took to social media to express his criticism of the SEC’s proposed fine. He emphasized that the company will file a response to the motion next month, by the deadline of April 22, 2024.
The SEC, in its filing, justifies the high fine amount by claiming it aims to deter similar conduct in the cryptocurrency space. It remains to be seen how the judge will rule on the SEC’s request and how Ripple will respond in its upcoming filing.
This ongoing lawsuit has significant implications for the entire cryptocurrency industry, as it grapples with regulatory clarity surrounding digital assets.
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