Ripple is pointing to the recent Terraform Labs settlement in a bid to reduce their own penalty from the U.S. Securities and Exchange Commission (SEC).
Earlier this week, the SEC reached a $4.47 billion settlement with Terraform Labs after the stablecoin firm was found liable for defrauding investors of $40 billion in the 2022 TerraUSD and Luna collapse.
[adinserter block="1"]The settlement includes $4.05 billion in disgorgement plus interest, in addition to a civil fine of $420 million, plus a penalty of $80 million for the firm’s disgraced founder, Do Kwon.
Ripple’s lawyers note that the $420 million civil penalty represents approximately 1.27% of Terraform Labs’ $33 billion gross sales, according to court documents shared by James K. Filan, a defense lawyer and crypto legal expert.
Ripple’s lawyers argue that the civil penalty assigned to Terraform “demonstrates the unreasonableness” of the civil penalty brought by the SEC in their own case.
“As Ripple’s opposition explained, in comparable (and even in more egregious) cases, the SEC has agreed to civil penalties ranging from 0.6% to 1.8% of the defendant’s gross revenues. Terraform fits that pattern. Here, by contrast, the SEC seeks a civil penalty far exceeding that range, even though there are no allegations of fraud in this case and Institutional Buyers did not suffer substantial losses.”
The SEC first sued the San Francisco-based payments firm in late 2020 for allegedly selling XRP as an unregistered security.
Last summer, US District Judge Analisa Torres ruled that Ripple’s automated, open-market sales of XRP, referred to as programmatic sales, did not constitute security offerings, contrary to what the SEC alleged.
The judge did, however, side with the SEC’s claim that Ripple’s sale of XRP directly to institutional buyers constituted a securities offering.
In March, the SEC asked the court to order the firm to pay $876,308,712 in disgorgement, $198,150,940 in prejudgment interest, and a $876,308,712 civil penalty, which totals around $1.95 billion.
Ripple’s lawyers have argued that $10 million would reflect an appropriate percentage of the company’s actual gross revenues from pre-complaint institutional sales.
Follow us on X, Facebook and TelegramDon't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any assets including cryptocurrencies, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Generated Image: Midjourney
