The U.S. Securities and Exchange Commission (SEC) has escalated its legal battle against Ripple Labs Inc., seeking a comprehensive penalty package to address violations of the Securities Act of 1933. Court documents released by attorney James K. Filan reveal the SEC’s request for comprehensive penalties against Ripple Labs.
The SEC is seeking permanent injunctions, the disgorgement of $876 million in profits from unauthorized sales of XRP, and $198 million in prejudgment interest. Additionally, the SEC proposes an extra $876 million in civil penalties, culminating in a total of nearly $2 billion.
Per the filing, this stringent action is the SEC’s intent to “deter Ripple and others” from future non-compliance with securities regulations. The regulator emphasized the need to correct the adverse impact Ripple’s unauthorized sales have had on investors and the overall market integrity.
The SEC has highlighted Ripple’s “violation history” and the “reckless nature” of its conduct as key reasons for its recommendations. The commission pointed to a deliberate evasion of legal obligations, with Ripple’s unregistered XRP sales generating nearly a billion dollars in direct violation of federal securities laws. According to the SEC, such actions necessitate significant penalties.
Moreover, the case, initiated in December 2020, saw a crucial ruling by New York Judge Analisa Torres last July. Judge Torres determined that while XRP sales on exchanges and through algorithms did not contravene U.S. law, Ripple’s institutional sales did, thus restricting the SEC’s allegations to these transactions.
The SEC’s motion also stressed the ease with which entities, especially in the crypto space, can replicate what Ripple is being accused of. It calls for the court to send a powerful message that such regulatory abuses will not be tolerated. The court has set a deadline for Ripple’s response no later than April 22, 2024, marking the next phase in this landmark legal confrontation.
Earlier, Stuart Alderoty, Ripple Labs’ chief legal officer, voiced strong criticism against the SEC’s actions. Alderoty, who had previously disclosed the SEC’s request for a nearly $2 billion fine against Ripple Labs, announced on social media his intention to respond formally to the SEC’s motion by the next month.
