The U.S. Securities and Exchange Commission (SEC) seeks a hefty $2 billion fine from Ripple Labs in an ongoing legal dispute regarding the classification of XRP as a security. This latest development comes as both parties prepare for the next stage of the case.
On March 25, Ripple’s Chief Legal Officer, Stuart Alderoty revealed the SEC’s intention to seek a $2 billion penalty through court filings in an X post.
Alderoty criticized the SEC’s approach accusing them of attempting to “punish and intimidate” Ripple and the wider cryptocurrency industry. He further asserted that Ripple will file a response to the SEC’s motion next month.
According to court documents, the SEC is requesting a total of $1.95 billion from Ripple Labs. This includes $876 million in disgorgement, $198 million in prejudgment interest and an additional $876 million civil penalty. The SEC contends that Ripple’s XRP sales constituted unregistered securities offerings.
Brad Garlinghouse, CEO of Ripple expressed strong disapproval of the SEC’s demands. He argued that the case lacks accusations of fraud or recklessness, making the $2 billion fine unprecedented. Garlinghouse also criticized the SEC’s overall conduct, citing instances where judges have admonished the agency for exceeding its legal authority.
The SEC filed suit against Ripple Labs, its CEO and co-founder in December 2020. The lawsuit centered around the classification of XRP, Ripple’s native token as a security. In July 2023, Judge Analisa Torres issued a partial victory for Ripple ruling that XRP sales on public exchanges did not qualify as securities offerings. However, the judge did rule against Ripple’s sales to institutional investors.
Despite the ongoing legal battle, the XRP spot market has shown little reaction. The price has risen slightly gaining 2% to trade at $0.644 at the time of writing. However, XRP’s overall performance in 2024 falls behind the broader cryptocurrency market with a year-to-date gain of only 5.22%.
Both Ripple and the SEC are preparing for the next phase of the legal battle. The SEC’s public filing with redactions which was expected on March 26 is now presented. Ripple will have until April 22 to submit their official response. The final judgment on the classification of XRP and the associated penalties remains to be determined by the court.
