The legal battle between Ripple(XRP) Labs and the U.S. Securities and Exchange Commission (SEC) appears to be nearing a conclusion, with a key development emerging over the weekend. Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, took to social media to highlight a potential shift in the SEC’s stance on the hefty fine demanded from the blockchain company.
SEC May Have Ditched the $2 Billion Fine
According to Alderoty, the SEC seems to have abandoned its initial request for a nearly $2 billion fine against Ripple. This hefty sum, proposed in March 2024, comprised a civil penalty of $876.3 million, disgorgement of $876.3 million, and prejudgment interest of $198.15 million.
Ripple has consistently contested the SEC’s claims, arguing that XRP sales did not violate securities laws. The company recently used the SEC’s settlement with TerraForm Labs (TFL) as leverage to advocate for a significantly lower penalty of $10 million.
Ripple Points to TFL Case for Comparison
The TFL case involved a fine exceeding $4 billion, with a $420 million civil penalty and $3.587 billion disgorgement. Ripple argued that the TFL penalty translates to a mere 1.27% of the company’s gross sales, significantly lower than the SEC’s proposed fine.
The SEC, however, contested Ripple’s interpretation of the TFL case. They argued that the ratio between the civil penalty and disgorgement in the TFL case is actually 11.7%. Applying this ratio to Ripple’s disgorgement amount, the SEC suggests a revised civil penalty of $102.6 million for Ripple.
Also Read: SEC Rejects Ripple’s Settlement Plea: $1.3 Billion Fine Looms Large (Can XRP Survive the Storm?)
Ripple Defends Itself and Emphasizes Lack of Harm
Alderoty addressed the SEC’s revised penalty calculation in his social media post. He highlighted that Ripple has vigorously defended itself against the accusations, unlike TFL which settled without admitting wrongdoing. Additionally, Alderoty emphasized that the court ruling on XRP’s status as a security clarified that it’s not a security, and there are no victims requiring compensation in the Ripple case.
Verdict Expected Soon
Both parties now await the court’s final verdict, which could be issued any day now. Ripple CEO Brad Garlinghouse previously estimated a potential verdict before the end of summer 2024. This ongoing legal battle has significant implications for the broader cryptocurrency industry, as it could set a precedent for how regulators approach digital asset sales.
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