A recent filing in the legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has reignited speculation of a potential settlement. The SEC filed its response to Ripple’s supplemental authority letter regarding the Consent Judgment in the SEC vs TerraForm Labs lawsuit.
Ripple’s Argument
On June 13, Ripple filed the supplementary authority letter to oppose the SEC’s demand for $2 billion in remedies. Ripple argued that the $420 million civil penalty imposed on TerraForm Labs in its settlement represents only 1.27% of TerraForm Labs’s gross sales of $33 billion.
The company argued that this amount is significantly lower than what the SEC seeks in its case. Additionally, Ripple emphasized that, unlike TerraForm Labs, there was no evidence of fraud in its case.
Read Also: Ripple vs SEC Case: What To Expect Today and This Week
Unlike the TerraForm Labs case, Ripple’s alleged unregistered securities sales did not harm investors. Ripple’s Chief Legal Officer (CLO) Stuart Alderoty pointed this out a few months ago. Alderoty referenced the Govil ruling where the court ruled that the SEC cannot demand crippling disgorgement without proving that investors suffered financial losses.
SEC’s Response
As shared on X by James K. Filan, the SEC argued that the TerraForm Labs settlement is not substantial in determining Ripple’s penalty. The SEC highlighted that the TerraForm Labs case involved a settlement where the company agreed to destroy the keys to its crypto wallets and reimburse investors, factors not present in the Ripple case.
The SEC argued further that Ripple has not acknowledged any wrongdoing and continues to operate similarly to how it did before the lawsuit.
Also, the SEC disputed Ripple’s method of calculating the TerraForm Labs penalty ratio. The SEC argued that Ripple should have compared the penalty to TerraForm Labs’s gross profit of $3.587 billion, resulting in a ratio of 11.7%. Applying this ratio to Ripple’s profits could result in a potential penalty of $102.6 million, significantly higher than the $10 million penalty Ripple proposes.
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Read Also: Ripple vs SEC Case Update as of March 15, 2024. Crucial Dates Released
XRP Community Anticipates Settlement
The SEC’s revised penalty estimation has led members of the XRP community to believe that a settlement is possible with the $102.6 million amount. Good Morning Crypto (@AbsGMCrypto), a prominent crypto personality on X, started a poll asking the community if they believe a settlement is imminent.
At press time, 69% agree that a settlement is coming, and 31% disagree, with almost 2,000 votes. The SEC has not publicly mentioned a settlement, and the events of the next few weeks will tell if the XRP community is right.
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