Ripple Chief Legal Officer Stuart Alderoty has fired back at the SEC’s recent response to Ripple’s supplementary authority letter. This letter contested the SEC’s request for a $2 billion penalty. Ripple argued that this figure was disproportionate, citing the TerraForm Labs case as a reference point.
The TerraForm Labs settlement involved a disgorgement of over $3.58 billion and a civil penalty of $420 million. Ripple contends that this penalty translates to only 1.27% of TerraForm Labs’s gross sales, significantly lower than the penalty the SEC seeks in their case. Moreover, Ripple emphasizes the absence of fraud allegations in their case, unlike TerraForm Labs.
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The SEC, however, has countered these arguments. It maintains that the TerraForm Labs settlement is not relevant to Ripple’s case. The SEC highlights key differences between the two situations. Notably, TerraForm Labs agreed to destroy crypto wallet keys and reimburse investors, actions not applicable to Ripple.
Furthermore, the SEC contests Ripple’s method of calculating the penalty ratio from the TerraForm Labs case. They argue for a comparison based on gross profit instead of gross sales, resulting in a potentially higher penalty for Ripple.
This revised penalty estimation, around $102.6 million, has fueled speculation within the XRP community about a possible settlement.
Ripple CLO Claps Back
Alderoty highlighted Ripple’s stance on the lawsuit. He emphasized that Ripple has not agreed to claims of wrongdoing and reiterated the court’s ruling that XRP is not a security. He also pointed out that Ripple has not agreed to anything with the SEC, stating that the regulator is just raging.
Additionally, he drew attention to the absence of any harmed investors in the case, just like the Govil ruling he highlighted months ago. This ruling established limitations on the SEC’s ability to demand disgorgement without evidence of investor losses, and Alderoty emphasized that there are no victims to compensate in the XRP lawsuit.
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The $2 Billion Claim
Alderoty added that the SEC seems to have abandoned its outrageous $2 billion claim, highlighting this as the positive part of the SEC’s filing. Although Alderoty has confirmed that there is currently no settlement agreement, the SEC may be backtracking because of the precedent of the Govil ruling.
Jeremy Hogan, a prominent attorney and well-respected figure in the XRP community, predicted in April that the court would make Ripple pay $100 million as a penalty, and not adhere to the SEC’s outrageous request. The SEC might be moving in this direction with the $102.6 million figure, and the community is eagerly watching to see what happens next.
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