Ripple Labs has reportedly issued its latest response to the US Securities and Exchange Commission’s (SEC) efforts to have the company pay around $2 billion in penalties. This, according to court papers submitted on Monday (April 22, 2024).
This latest update comes after the SEC stated this past month that Ripple needs to pay approximately $2 billion in penalties for allegedly selling / offering XRP tokens to institutional investors.
However, Ripple Labs stated that amount is actually closer to $10 million (as mentioned in the Fintech firm’s opposition motion).
Our opposition to the SEC’s request for $2B in penalties for legacy institutional sales is now public. 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… https://t.co/GLcdsyInZW
— Stuart Alderoty (@s_alderoty) April 23, 2024
Ripple Labs’ Chief Legal Office Stuart Alderoty remarked via social media:
“Our opposition to the SEC’s request for $2B in penalties for legacy institutional sales is now public. 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. We remain confident that the Judge will approach this final remedies phase fairly.”
As widely reported, the SEC and Ripple Labs have had a really lengthy court battle during this past few years.
The court cases commenced when the SEC alleged that Ripple Labs had acquired $1.3 billion via the sale of XRP tokens which the regulator claims is an unregistered security.
This past year, Judge Analisa Torres of New York stated that a portion of Ripple Labs’ overall sales, referred to as programmatic, of XRP was not in violation of applicable securities laws due to it being a blind bid process set in place for them.
But Judge Torres also said that other direct sales of the XRP crypto token to institutional clients were considered to be unregistered securities.
The SEC has stated that Ripple Labs made billions in institutional from XRP sales and asserte as part of its court filing that Ripple Labs presently maintains the largest amount of XRP in circulation by any entity and continues “to sell it, unregistered, to institutional purchasers.”
Meanwhile, Ripple points out that it altered the manner in which it sells XRP tokens following this past year’s court ruling.
The enterprise blockchain company stated as part of its most recent filing:
“Ripple has publicly acknowledged that ruling, and does so again now. It has changed the way it sells XRP and changed its contracts to avoid the problems identified by this Court.”
As reported widely, the SEC stated this past month that it was expecting Ripple Labs to pay around $2 billion. This figure reportedly includes $876 million worth of disgorgement, $198 million in prejudgment interest along with a civil penalty of $876 million. This was mentioned in the suggested judgment.
The SEC also requested case Judge Torres to consider the great extent of the company’s alleged misconduct.
However, the US regulator has not been able to demonstrate that disgorgement is justified in this case and also stated prejudgment interest must also be not added in. This, according to Ripple’s latest arguments.
The company also says that a civil penalty must not be any more than $10 million.
The company maintains that it’s “not egregious.”
As stated in the official filing:
“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. “
