In a recent development in the cryptocurrency sector, the US Securities and Exchange Commission (SEC) firmly rejected an attempt by Ripple to reduce a proposed fine, arguing that it is not comparable to the Terraform Labs case, which involved a significantly lower sanction.
According to the SEC, the circumstances of the Terraform case, which included the company’s bankruptcy and restitution agreements to investors, differ substantially from those of Ripple, which remains operational and profitable. Ripple, which has been facing a lawsuit since 2020 for using XRP as an unregistered security, suggested that the $2 billion fine imposed by the SEC was excessive, especially when compared to the $33 billion in fraudulent sales by Terraform, resulting in a penalty of only 1.27% of the total. “The requirement of such a high fine is disproportionate,” Ripple stated, pointing to the precedent set in the Terraform case.
However, the SEC emphasized that the differences between the cases are significant. While Terraform Labs agreed to severe operational and financial restrictions after declaring bankruptcy, Ripple did not accept comparable measures. “Comparing penalties between the cases is not valid, given the discrepancies in the actions of the two companies,” said an SEC representative. Furthermore, it was noted that Ripple failed to consider gross profit in its comparison, which, according to SEC calculations, would raise the fine to $102.6 million, based on Ripple’s profits, and not the $10 million proposed by them.
In 2020, Judge Analisa Torres partially acknowledged Ripple’s claims, considering XRP a security only in direct transactions with institutional investors, but not in programmatic sales. Since then, the dispute between Ripple and the SEC has intensified, with heated discussions about the proportionality and fairness of the penalties.
The SEC emphasizes that the proposed fine reflects not only the seriousness of the violations but also Ripple’s financial capacity, something that, according to them, does not compare to the situation of Terraform Labs. The legal battle between Ripple and the SEC continues, highlighting the complexities of cryptocurrency regulation and the implications for the broader market.
Disclaimer: The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment, or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.
Editor’s Choice: Turnaround in the Ripple vs SEC case; Details Ripple Launches Fund for XRP Ledger in Japan and Korea; Company announces acquisition of Standard Custody
