July 14, 2024
Ripple SEC Terraform case
Policy & Regulation

Ripple Challenges SEC Penalty Amid Terraform Settlement

Ripple Requests a Fair Penalty Amid the SEC v. Terraform Settlement

Lawyers representing Ripple, a prominent blockchain firm, have petitioned the U.S. District Court for the Southern District of New York for a reasonable civil penalty in response to the ongoing legal proceedings against the United States Securities and Exchange Commission (SEC). This move follows a recent settlement between the SEC and Terraform Labs, raising questions about consistency in regulatory penalties within the blockchain industry.

In their June 13 filing, Ripple’s legal team highlighted the disparity between the SEC’s proposed penalties and those in similar cases, including the Terraform settlement. The SEC seeks approximately $2 billion from Ripple in disgorgement, prejudgment interest, and civil penalties, contrasting sharply with Ripple’s proposed penalty cap of $10 million. Citing precedents set in cases involving Block.one, Genesis Global Capital, and Telegram, Ripple’s lawyers argue for a penalty aligned with industry norms and proportionate to the alleged offenses.

Historical Context: Ripple vs. SEC

Ripple’s legal battle with the SEC dates back to December 2020, when the SEC accused the company of utilizing its XRP token as an unregistered security to raise capital. The case has garnered significant attention within the cryptocurrency community, influencing regulatory interpretations of digital assets. In a pivotal ruling in July 2023, Judge Analisa Torres determined that XRP did not qualify as a security in certain contexts, marking a crucial legal precedent.

SEC’s Legal Strategy and Ripple’s Defense

The SEC’s approach to penalties in cases involving blockchain firms has varied widely, as illustrated by the Terraform settlement. Despite Terraform’s fraud liability findings and a $4.5 billion settlement approval, Ripple contends that its penalty request remains disproportionately high given the absence of fraud allegations and minimal investor losses in its case. Ripple seeks to leverage these discrepancies to advocate for a penalty structure consistent with industry norms and legal fairness.

Guidelines

As the legal landscape surrounding cryptocurrencies continues to evolve, Ripple’s case against the SEC stands as one of the longest and most closely watched legal disputes in the industry. The outcome could significantly impact how regulatory agencies approach blockchain companies in the future. With ongoing discussions and judicial decisions yet to come, the resolution of Ripple’s case will likely influence future regulatory actions and legal precedents concerning digital assets.

By navigating these legal challenges, Ripple and its legal team aim to establish clearer guidelines for regulatory compliance in the blockchain sector, emphasizing fair and equitable treatment under the law.

Image by Gbob on Freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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