Lawyers for blockchain firm Ripple have urged a court to consider an “appropriate” civil penalty in its case against the United States Securities and Exchange Commission (SEC), referencing a recent settlement between the SEC and Terraform Labs.
On June 13, Ripple’s legal team filed a notice of supplemental authority in the U.S. District Court for the Southern District of New York.
They argued the SEC’s civil penalty against Ripple was “unreasonable,” citing a recent $4.5 billion settlement with Terraform Labs and its co-founder, Do Kwon.
The SEC has requested that Ripple pay approximately $2 billion in disgorgement, prejudgment interest, and civil penalties.
However, Ripple has argued for a penalty no greater than $10 million.
Ripple’s lawyers highlighted similar cases involving Block.one, Genesis Global Capital, and Telegram, but redacted specific information regarding their gross revenue.
“As Ripple’s opposition explained, in comparable (and even in more egregious) cases, the SEC has agreed to civil penalties ranging from 0.6% to 1.8% of the defendant’s gross revenues,” said Ripple’s lawyers.
“Terraform fits that pattern.
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Here, by contrast, the SEC seeks a civil penalty far exceeding that range, even though there are no allegations of fraud in this case and Institutional Buyers did not suffer substantial losses.
Terraform thus confirms that the Court should reject the SEC’s disproportionate and unprecedented request and that an appropriate civil penalty would be no more than $10 million.”
After a two-week trial in April, a jury found Kwon and Terraform liable for fraud. Meanwhile, Ripple’s case with the SEC has been ongoing since December 2020.
The regulator alleged that Ripple used XRP as an unregistered security to raise funds.
This case set a significant legal precedent when, in July 2023, Judge Analisa Torres ruled that the XRP token was not a security in regard to programmatic sales on exchanges.
In October 2023, the SEC moved to dismiss its case against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen, indicating plans to discuss remedies with Ripple.
Judge Torres initially scheduled the trial between Ripple and the SEC to begin in April, but adjourned it in October with no set date for resumption.
The timing for the trial remains uncertain.
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