Lawyers for blockchain company Ripple have asked the court to consider an “appropriate” civil penalty in their case.
Lawyers for blockchain company Ripple have asked the court to consider an “appropriate” civil penalty in their case against the U.S. Securities and Exchange Commission (SEC) following a settlement between the regulator and Terraform Labs.
In a filing June 13 in the U.S. District Court for the Southern District of New York, Ripple’s legal team filed a notice of supplemental authority alleging the “unreasonableness” of the civil penalty imposed by the SEC, citing a settlement in the Terraform case. Before Ripple’s filing, a federal judge approved a $4.5 billion settlement between the SEC, Terraform Labs and its co-founder Do Kwon.
The SEC demanded that Ripple pay nearly $2 billion in debt repayments, prejudgment interest, and civil penalties, while the blockchain company demanded a fine of no more than $10 million. Ripple’s lawyers made similar arguments in sanctions imposed in the SEC cases against Block.one, Genesis Global Capital and Telegram, but the filing withheld information about the company’s total revenue.
“As Ripple’s opposition has made clear, in similar (and even more egregious) cases, the SEC has agreed to impose civil penalties ranging from 0.6% to 1.8% of the defendant’s total revenue “, Ripple’s lawyers said. “Terraform fits this style. Here, in contrast, the SEC is seeking a civil penalty well beyond that range, even though there have been no allegations of fraud in this case and institutional buyers have not suffered significant losses. Terraform therefore asserts that the court should reject the SEC’s disproportionate and unprecedented request and that the appropriate civil penalty would not exceed $10 million.
One of the longest legal battles in cryptocurrencies
After a two-week trial in April, a jury found Kwon and Terraform liable for the fraud. In contrast, Ripple’s case with the SEC has been ongoing since December 2020, when the regulator alleged that the blockchain company was using XRP (XRP) as an unregistered security to raise funds. The case set a major legal precedent when in July 2023, Judge Analisa Torres ruled that the XRP token was not a security with respect to automated sales on exchanges.
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The SEC moved to dismiss its case against Ripple CEO Brad Garlinghouse and CEO Chris Larsen in October 2023, saying at the time that it planned to discuss solutions with the blockchain company. Judge Torres had initially scheduled the trial between Ripple and the SEC to begin in April, but in October 2023 he postponed the proceedings without a specific date for its resumption. As of press time, it is unclear when a judge might set a trial date.
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