In a significant legal development, Ripple Labs has vigorously challenged the U.S. Securities and Exchange Commission’s (SEC) proposal for a nearly $2 billion fine against the blockchain-based payment protocol company.
The legal dispute stems from the SEC’s assertion that Ripple should face a substantial financial penalty, to which Ripple has responded by suggesting a more reasonable figure of no more than $10 million.
This legal contention surfaced in a recent court filing where Ripple Labs firmly opposed the SEC’s plea to a federal judge.
The blockchain giant argued against the imposition of the suggested penalties, which include an injunction, disgorgement of funds, and pre-judgment interest.
The submission emphasized Ripple’s commitment to regulatory compliance and criticized the SEC’s demands as overly severe, lacking both legal and principled foundations.
The filing elaborated on the SEC’s breakdown of the proposed fines, totaling nearly $2 billion, comprising $876 million in disgorgement, an additional $876 million in civil penalties, and $198 million in pre-judgment interest.
Ripple decried these figures as excessive and not reflective of their actual business revenues, though specific revenue details were redacted from the document.
The timing of these legal maneuvers was highlighted by Ripple Labs’ Chief Legal Officer, Stuart Alderoty, who, on March 25, disclosed the SEC’s punitive measures against Ripple.
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Alderoty criticized the SEC’s persistent efforts to not only penalize Ripple but to cast a shadow over the broader cryptocurrency sector.
He described the SEC’s actions as an ongoing attempt to intimidate the industry throughout the U.S.
Moreover, Ripple’s filing presented a case for a more proportionate financial penalty.
It argued that a $10 million fine would be more aligned with fines levied in similar cases involving digital assets, where there was no evidence of intentional wrongdoing or significant harm or risk to others.
Alderoty also commented on the broader implications of the SEC’s aggressive stance, suggesting it represented a concerted effort to intimidate the entire crypto community in the U.S.
He remained hopeful, however, that the judge would consider the merits of Ripple’s arguments favorably during the final remedies phase of the case, particularly noting Ripple’s victories on several key issues in the proceedings.
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