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The United States Securities and Exchange Commission (SEC) has criticized Ripple Labs’ latest argument for a lower penalty, saying it wouldn’t be enough.
On June 13, Ripple cited the SEC’s settlement with Terraform Labs <a href="https://cointelegraph.com/news/ripples-sec-terraform-civil-penalty">when it again asked</a>&nbsp;Judge Analisa Torres of the&nbsp;United States District Court for the Southern District of New York for a penalty of “no more than $10 million” — far lower than the <a href="https://cointelegraph.com/news/ripple-pay-significant-civil-penalty-sec"></a><a href="https://cointelegraph.com/news/ripple-pay-significant-civil-penalty-sec">regulator’s proposed $876.3 million civil penalty</a>.
A day later, the SEC argued in a June 14 letter to Torres that its <a href="https://cointelegraph.com/news/judge-approves-4-5b-terraform-sec-settlement">$4.5 billion settlement</a> with Terraform Labs and its co-founder Do Kwon — inclusive of a $420 million civil penalty — was made as the firm is bankrupt, agreed to return money to investors and fired leaders “in charge at the time of the violations.”
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 “Ripple is agreeing to none of this relief — in fact, Ripple is agreeing to nothing.”
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Ripple’s argument that Terraform’s $420 million civil penalty was around 1.27% of its “$33 billion gross sales” wasn’t an “apples-to-apples comparison,” the SEC said.
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 <img src="https://s3.cointelegraph.com/uploads/2024-06/78de6f97-3c2a-47fa-8b16-ac2bbeee89f0.png" alt="" title="">
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 Highlighted excerpt from the SEC’s letter. Source: Pacer
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The SEC added it measured Terraform’s penalty against “the gross profit of the violative conduct,” which it pinned at over $3.5 billion — a nearly 12% ratio.
The regulator argued Ripple’s civil penalty would be $102.6 million if the same ratio were applied to the $876.3 million of Ripple’s gross profits it asked to disgorge.
“That low of a penalty would not satisfy the purposes of the civil penalty statutes,” the SEC said.
Related: <a href="https://cointelegraph.com/news/gary-gensler-could-literally-cost-joe-biden-cryptocurrency-us-presidential-election-mark-cuban">Gary Gensler could ‘literally cost Joe Biden the election’ — Mark Cuban</a>
The SEC’s proposed penalties for Ripple total nearly $2 billion, which includes $198.2 million in prejudgment interest, $876.3 million in civil penalty and another $876.3 million in disgorgement.
The pair have <a href="https://cointelegraph.com/learn/the-sec-vs-ripple-lawsuit-everything-you-need-to-know">been in their court fight</a><a href="https://cointelegraph.com/learn/the-sec-vs-ripple-lawsuit-everything-you-need-to-know"></a> since 2020 when the SEC claimed Ripple sold unregistered <a href="https://cointelegraph.com/learn/commodities-vs-securities">securities</a>, which Torres <a href="https://cointelegraph.com/news/ripple-wins-case-against-sec-as-judge-rules-xrp-is-not-a-security">agreed it did</a>&nbsp;in a July 2023 ruling — but only when sold to institutional investors.
In May, the SEC <a href="https://www.courtlistener.com/docket/19857399/966/securities-and-exchange-commission-v-ripple-labs-inc/" target="_blank" rel="noopener nofollow">objected</a> to Ripple’s bid to seal some of its finances, with the regulator arguing the firm should disclose the revenue it made from XRP (<a href="https://cointelegraph.com/xrp-price-index">XRP</a>) sales that Torres ruled were unregistered.
Magazine: <a href="https://cointelegraph.com/magazine/godzilla-vs-kong-can-sec-prevail-against-crypto-legal-firepower/">Godzilla vs. Kong — SEC faces fierce battle against crypto’s legal firepower</a>

SEC shoots down Ripple’s argument for a lower penalty

Cointelegraph

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