As the legal battle between Ripple and the United States Securities and Exchange Commission (SEC) is yet to conclude, the blockchain company has filed another argument against the securities watchdog’s excessive penalty request regarding Ripple’s institutional XRP sales.
Specifically, Ripple’s legal team has filed a Notice of Supplemental Authority regarding the Consent Judgment in the SEC’s case against Terraform Labs, according to a recent court document shared by a defense attorney and former federal prosecutor, James K. Filan, in an X post on June 13.
Seeking proportional penalty
Indeed, the argument points out that the “proposed consent order requires Terraform to pay $3,586,875,883 in disgorgement,” as well as a $420,000,000 civil penalty,” which represents “approximately 1.27% of Defendants’ $33 billion gross sales,” explaining that:
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“The civil penalty sought by the SEC in Terraform demonstrates the unreasonableness of the civil penalty sought by the SEC in this case. As Ripple’s opposition explained, in comparable (and even more egregious) cases, the SEC has agreed to civil penalties ranging from 0.6% to 1.8% of the defendant’s gross revenues.”
On the other hand, the blockchain firm’s lawyers argue that, in the case against Ripple, the “SEC seeks a civil penalty far exceeding that range, even though there are no allegations of fraud in this case and Institutional Buyers did not suffer substantial losses,” adding that:
“Terraform thus confirms that the Court should reject the SEC’s disproportionate and unprecedented request and that an appropriate civil penalty would be no more than $10 million.”
Terraform v. SEC
As a reminder, the regulator has recently sought approval for a final consent judgment in its case against Terraform Labs after a jury verdict found the company and its former CEO, Do Kwon, liable “for intentionally and recklessly orchestrating one of the largest securities frauds in US history.”
They stood accused of organizing “two long-running, massive fraudulent schemes,” touting false transaction data to potential investors while secretly supporting a token’s price through a trading firm and claiming its price had risen thanks to a proprietary algorithm, leading to the losses of over $40 billion in investor funds.
Following the verdict, Chris Amani, the current CEO of Terraform Labs, has shared in an X post what was next for the company – specifically that it will shut down its operations following the settlement with the SEC:
Meanwhile, XRP, the cryptocurrency that has been at the center of the Ripple v. SEC legal saga, was at press time changing hands at the price of $0.48, a loss of 2.30% on the day, as well as a drop of 9.03% across the week, accumulating a decline of 4.34% on its monthly chart, as per data retrieved by Finbold on June 14.
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