The US Securities and Exchange Commission (SEC) has criticized Ripple Labs’ argument for a lower civil penalty, stating it wouldn’t be enough. Ripple cited the SEC’s settlement with Terraform Labs when it asked Judge Analisa Torres of the United States District Court for the Southern District of New York for a penalty of “no more than $10 million,” far lower than the regulator’s proposed $876.3 million civil penalty. The SEC argued that its $4.5 billion settlement with Terraform Labs and its co-founder Do Kwon, inclusive of a $420 million civil penalty, was made as the firm is bankrupt, agreed to return money to investors, and fired leaders “in charge at the time of the violations.”
The regulator added that Ripple’s civil penalty would be $102.6 million if the same ratio were applied to the $876.3 million of Ripple’s gross profits it asked to disgorge. The proposed penalties for Ripple total nearly $2 billion, which includes $198.2 million in prejudgment interest, $876.3 million in civil penalty, and another $876.3 million in disgorgement. The pair have been in their court fight since 2020 when the SEC claimed Ripple sold unregistered securities, which Torres agreed it did in a July 2023 ruling — but only when sold to institutional investors.
