The U.S. Securities and Exchange Commission (SEC) has escalated its legal dispute with Ripple Labs by requesting a New York judge to impose $2 billion in fines and penalties on the company. This information was recently revealed by Ripple’s Chief Legal Officer, Stuart Alderoty, on the social media platform, X.
The move comes amidst an ongoing lawsuit initiated by the SEC in 2020. The agency alleges Ripple of selling XRP as an unregistered security. The blockchain payment firm maintains that XRP is a utility token and not a security.
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Ripple Denounces SEC’s Actions
Alderoty has criticized the SEC’s approach, claiming the requested fines are excessive and the agency’s arguments are misleading. He highlighted Ripple’s intention to file a formal response in the coming month and expressed concerns about the agency’s overall regulatory strategy.
“This request further reinforces our belief that the SEC is not acting in good faith,” Alderoty stated. “Their actions appear aimed at punishing Ripple and the broader cryptocurrency industry, rather than faithfully applying the law.”
Brad Garlinghouse, Ripple CEO, echoed these sentiments on social media. He pointed to recent court decisions where judges ruled against the SEC in lawsuits involving other cryptocurrency firms. Garlinghouse argued that the SEC’s actions demonstrate a disregard for legal precedent and a lack of focus on addressing genuine securities fraud within the cryptocurrency space.
Gensler’s SEC has repeatedly acted outside the law – not going unnoticed by Judges admonishing the agency for a "gross abuse of the power entrusted to it by Congress" (DEBT Box case) and for acting without "faithful allegiance to the law" (Ripple case). Let’s not also forget… https://t.co/vay6WDBfJc
— Brad Garlinghouse (@bgarlinghouse) March 25, 2024
Background of the Legal Dispute
The SEC filed suit against Ripple in December 2020, alleging that the company raised over $1.3 billion through the sales of XRP without proper registration. The SEC contends that XRP functions similarly to a stock and should be subject to securities regulations.
In a partial victory for Ripple, a judge ruled last year that certain XRP sales conducted through a blind bidding process did not qualify as securities offerings. However, the judge determined that direct sales of XRP to institutional investors constitute unregistered securities.
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Read Also: Ripple CTO and Deaton Respond to Rumors about Ripple’s Plan to Initiate 10 Billion XRP Buyback
Current Status and Future Implications
The SEC’s request for a $2 billion judgment significantly raises the stakes in this ongoing legal battle. The details of the SEC’s filing remain under seal, but Ripple’s response is expected next month.
This case has wider implications for the cryptocurrency industry. A definitive ruling on the classification of XRP could set a precedent for how the SEC regulates other digital assets. The outcome of this lawsuit is likely to be closely watched by cryptocurrency companies and investors around the world.
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