In a recent development in the cryptocurrency sector, the U.S. Securities and Exchange Commission (SEC) firmly rejected an attempt by Ripple to reduce a proposed fine, arguing that it is not comparable to the Terraform Labs case, which involved a significantly lower sanction.
According to the SEC, the circumstances of the Terraform case, which included the company’s bankruptcy and restitution agreements with investors, differ substantially from those of Ripple, which remains operational and profitable.
Ripple, which has been facing a lawsuit since 2020 for using XRP as an unregistered security, suggested that the $2 billion fine imposed by the SEC was excessive, especially when compared to Terraform’s $33 billion in fraudulent sales, resulting in a penalty of only 1.27% of the total. “The demand for such a high fine is disproportionate,” stated Ripple, pointing to the precedent set in the Terraform case.
However, the SEC emphasized that the differences between the cases are significant. While Terraform Labs agreed to severe operational and financial restrictions after declaring bankruptcy, Ripple did not accept comparable measures. “Comparing penalties between the cases is not valid, given the discrepancies in the actions of the two companies,” said an SEC representative. Additionally, it was noted that Ripple failed to consider gross profit in its comparison, which, according to SEC calculations, would raise the fine to $102.6 million, based on Ripple’s profits, rather than the $10 million proposed by them.
In 2020, Judge Analisa Torres partially agreed with Ripple’s claims, considering XRP a security only in direct transactions with institutional investors, but not in programmatic sales. Since then, the dispute between Ripple and the SEC has escalated, with heated discussions about the proportionality and fairness of the penalties.
The SEC emphasizes that the proposed fine reflects not only the seriousness of the violations but also Ripple’s financial capacity, which, according to them, does not compare to the situation of Terraform Labs. The legal battle between Ripple and the SEC continues, highlighting the complexities of cryptocurrency regulation and the implications for the broader market.
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