Ripple’s Legal Defense Against $2 Billion Fine Rejected by SEC

In a recent development, the US Securities and Exchange Commission (SEC) has rejected Ripple’s attempt to use the Terraform Labs case to argue against a proposed $2 billion fine. Ripple contended that the SEC’s penalty request is disproportionate, citing that the SEC sought only 1.27% from Terraform Labs despite the latter’s gross sales of $33 billion and investor losses exceeding $40 billion due to fraudulent activities.
The SEC dismissed Ripple’s comparison as misleading, emphasizing key differences between the two cases. Unlike Ripple, Terraform Labs is insolvent and has agreed to severe penalties, including ceasing operations and compensating its members. The regulator noted that Ripple has not taken similar corrective actions.
Moreover, the SEC argued that Ripple’s penalty calculation did not account for gross profit and that a more accurate comparison would result in a penalty of $102.6 million, far exceeding Ripple’s proposed $10 million.
Ripple has been embroiled in a legal battle with the SEC since 2020, accused of raising funds by selling XRP as unregistered securities, with no conclusion reached yet.