The legal battle between Ripple(XRP) and the SEC continues, with Ripple arguing for a significantly lower civil penalty than the SEC’s proposed $2 billion. This dispute centers on whether XRP, Ripple’s native token, constitutes an unregistered security.
Ripple’s Argument: A Matter of Proportion
Ripple’s lawyers point to the SEC’s settlements in other cases, like Block.one, Genesis Global Capital, and Telegram, where the imposed civil penalties ranged between 0.6% and 1.8% of the defendant’s gross revenue. The details of Ripple’s revenue, however, are redacted from the recent filing.
The core of Ripple’s argument hinges on the Terraform case. Here, the SEC pursued a case against Terraform Labs and its co-founder Do Kwon, ultimately winning a fraud judgment in April 2024. Despite the allegations of fraud in the Terraform case, the SEC’s settlement involved a penalty within the aforementioned range.
In contrast, Ripple argues that the SEC’s proposed penalty against them is “disproportionate and unprecedented” considering there are no fraud allegations and no evidence of substantial losses suffered by institutional buyers of XRP. Ripple believes the Terraform case strengthens their position, suggesting a much lower penalty, potentially around $10 million, would be more appropriate.
A Long and Winding Road
This legal battle, one of the longest-running sagas in the crypto space, began in December 2020. The SEC’s initial claim was that Ripple used XRP as an unregistered security to raise funds. However, a significant development occurred in July 2023 when Judge Analisa Torres ruled that XRP was not a security in the context of programmatic sales on exchanges. This decision established a legal precedent with potential wider implications for the crypto industry.
Current Status and Uncertain Future
The SEC dropped its charges against Ripple’s CEO and executive chair in October 2023, indicating a potential shift towards discussing remedies with Ripple. Judge Torres initially scheduled the trial between Ripple and the SEC for April 2024, but it was subsequently adjourned with no new date set. As of now, it remains unclear when the trial will resume.
Ripple’s strategy of citing settlements in other cases and drawing parallels with the Terraform case suggests they are confident in their position. However, with the court date yet to be determined, the final resolution to this ongoing legal battle is still on the horizon.