On April 22, Ripple Labs filed a rebuttal to the Securities and Exchange Commission’s (SEC) push for nearly $2 billion in penalties. The move comes as the latest development in the ongoing court case between the two parties, which has been raging since December 2020.
The SEC has accused Ripple of raising $1.3 billion through the sale of XRP, which the agency claims is an unregistered security. On 13 July 2023, Hon. Analisa Torres, a district judge at the United States District Court for the Southern District of New York, granted the SEC’s motion for summary judgment concerning the Institutional Sales but denied it for other matters. Also, the court granted Ripple’s motion for summary judgment regarding the Programmatic Sales, the Other Distributions, and the sales made by Larsen and Garlinghouse. However, the court denied Ripple’s motion concerning the Institutional Sales. As for the SEC’s motion for summary judgment on the aiding and abetting claim against Larsen and Garlinghouse, it was denied.
In light of this ruling, the SEC argued in its court filing last month that Ripple should pay close to $2 billion in fines, including $876 million in disgorgement, $198 million in prejudgment interest, and a civil penalty of $876 million. The agency cited the severity of Ripple’s misconduct and the fact that the firm still holds the largest amount of XRP and continues to sell it, unregistered, to institutional purchasers.
Ripple, however, has a different perspective on the matter. In its opposition motion filed on Monday, the firm stated that the penalty figure should be closer to $10 million. Ripple’s Chief Legal Officer, Stuart Alderoty, took to X (formerly Twitter) to express the company’s stance, stating, “In a case that had no allegations (or findings) of recklessness or fraud, and in which Ripple won on significant issues, the SEC’s ask is just more evidence of its ongoing intimidation against all of crypto in the U.S.”
Alderoty also emphasized that Ripple remains confident that Judge Torres will approach the final remedies phase fairly. The firm argued that the SEC fails to show that disgorgement is warranted and that prejudgment interest should be thrown out. Additionally, Ripple believes that a civil penalty should not exceed $10 million.
In its filing, Ripple stated, “Ripple’s conduct was not egregious. Its Institutional Sales were made to forty-one ‘sophisticated individuals and entities’ over eight years. Those entities were fully informed about the transactions into which they were entering and chose to do so in their own financial interests. There is no allegation that Ripple deceived or misled them.”
Ripple also pointed out that the way it sells XRP has changed since last year’s court ruling. The firm has publicly acknowledged the ruling and has modified its contracts to avoid the problems identified by the court.
