Key Points
- The SEC has dramatically reduced Ripple’s penalty from $2 billion to $102.6 million.
- Ripple argued the initial fine was excessive, citing a recent SEC settlement as a precedent.
- Whether Ripple accepts the offer or continues the legal battle remains uncertain.
- This decision marks a pivotal moment in the ongoing legal struggle over XRP sales.
The legal battle between the SEC and Ripple Labs over XRP sales as unregistered securities took a significant turn on June 14, 2024. A legal document shared by defense lawyer James Filan revealed a substantial reduction in the SEC’s proposed settlement amount for Ripple.
Ripple Battles $2 Billion SEC Penalty
Initially, the SEC proposed a staggering $2 billion penalty from Ripple. The new filing, however, significantly reduces this sum to $102.6 million. This development came just a day after Ripple filed a legal brief arguing that the original $2 billion penalty was unreasonable.
In its defense, Ripple pointed to the recent Terraform Labs case and past SEC settlements to argue for a fairer settlement amount. Terraform Labs, the company behind the Luna cryptocurrency, reached a settlement with the SEC for $4.4 billion on June 13. Ripple contended that the SEC typically seeks penalties between 0.6% and 1.8% of the defendant’s revenue in such cases, proposing a settlement of only $10 million. The SEC, however, rejected Ripple’s comparison, claiming it was irrelevant to their case.
#XRPCommunity #SECGov v. #Ripple #XRP @SECGov has responded to @Ripple’s letter regarding the TerraForm Labs Consent Judgment. pic.twitter.com/VvGSJffwa8
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) June 14, 2024
$102.6 Million Settlement on the Table
According to the SEC filing, “Ripple fails to acknowledge the significant differences between their case and Terraform Labs. Unlike Ripple, Terraform Labs is demonstrably out of business and has agreed to burn all their crypto asset securities, return funds to investors, and remove key personnel involved in the violations.”
The SEC emphasized that these factors heavily influenced their settlement offer with Terraform Labs and are not applicable to Ripple’s case. They added: “Ripple is agreeing to none of this relief—in fact, Ripple is agreeing to nothing.”
While the reduced amount of $102.6 million is significantly lower than the initial proposal, the SEC maintains that this settlement is necessary to deter future misconduct in the cryptocurrency industry. The outcome of this ongoing legal battle will be closely watched by investors and companies in the crypto space.
SEC Lowers Settlement Offer for Ripple to $102.6 Million.
The SEC has significantly reduced its proposed penalty for Ripple Labs in their ongoing legal battle over XRP sales.https://t.co/5dH8349e0B
— 🇳🇱 MackAttackXRP® 🇳🇱 67K-XRP-Followers (@MackAttackXRP) June 15, 2024
On the Flipside
Accepting the $102.6 million settlement wouldn’t necessarily clarify XRP’s legal status as a security. This lack of definitive resolution could be a major drawback for Ripple. On the other hand, rejecting the settlement could lead to a lengthy court battle with an uncertain outcome, potentially resulting in a much harsher penalty.
Why This Matters
The slashed settlement offer from the SEC for Ripple suggests a potential shift in their negotiation strategy. The final settlement amount will impact not only Ripple but also set a precedent for future SEC enforcement actions. This decision could significantly influence how cryptocurrency companies approach security offerings, shaping the regulatory landscape for the industry.
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