Attorneys representing Ripple, a blockchain company, have urged a court to consider an “appropriate” civil penalty in their case against the Securities and Exchange Commission (SEC) after the regulator reached a settlement with Terraform Labs. Ripple’s legal team filed a notice of supplemental authority on June 13 in the U.S. District Court for the Southern District of New York, questioning the “unreasonableness” of the SEC’s proposed penalty by referencing the Terraform case settlement. The SEC had recently approved a $4.5 billion settlement with Terraform Labs and its co-founder Do Kwon.
The SEC has demanded that Ripple pay around $2 billion in disgorgement, prejudgment interest, and civil penalties, while Ripple has argued for a penalty of no more than $10 million. Ripple’s lawyers have pointed to previous cases involving Block.one, Genesis Global Capital, and Telegram to support their argument, citing that the SEC had agreed to civil penalties ranging from 0.6% to 1.8% of the defendant’s gross revenues in similar cases. The filing also highlighted that the SEC’s request for a penalty well beyond this range in the Ripple case is disproportionate and unprecedented.
Following a two-week trial in April, Kwon and Terraform were found liable for fraud. In contrast, Ripple’s legal battle with the SEC dates back to December 2020 when the regulator accused the company of using XRP as an unregistered security to raise funds. The case made headlines in July 2023 when Judge Analisa Torres ruled that the XRP token was not a security in relation to its sales on exchanges.
The SEC decided to drop its case against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen in October 2023, indicating its intent to discuss remedies with the company. Judge Torres had initially set a trial date for April but later postponed the proceedings with no confirmed resumption date. The timeline for the trial remains uncertain.
In the world of cryptocurrency legal battles, the SEC faces a formidable challenge against Ripple’s legal team, akin to a showdown between Godzilla and Kong.