The long-running legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple is in its final stages. On April 22, Ripple filed an opposition brief contesting the penalties and disgorgement amounts requested by the SEC.
The SEC, in its remedies motion, sought a significant financial fine adding up to $1.95 billion. This is a sum of the $876.3 million civil penalty, $876.3 million disgorgement, and $198.15 million prejudgment interest. Ripple strongly disagreed with these figures. The company’s arguments centered on three key points:
- Unfounded Future Violations: Ripple argued the SEC failed to demonstrate a likelihood of future violations or any history of reckless disregard for regulations during XRP sales to institutional investors.
- Disgorgement Inapplicability: Citing the Govil case, Ripple contended that disgorgement was not warranted. They argued the SEC could not prove XRP sales caused financial harm, and any disgorgement should factor in Ripple’s legitimate business expenses. Ripple’s Chief Legal Officer (CLO) hinted at this recently when the court rejected the SEC’s request for a reconsideration of the ruling, and many experts expected this ruling to be mentioned in Ripple’s filing.
- Excessive Penalty: Ripple challenged the proposed $876.3 million civil penalty as excessive. They pointed to the SEC’s approach in other digital asset cases and argued the SEC’s arguments in this case did not justify such a high penalty. Ripple believes the SEC’s civil penalty should not exceed $10 million.
Ripple Demonstrates Compliance Efforts
In addition to contesting the penalties, Ripple outlined steps taken to comply with regulations. The company emphasized changes made to XRP sales practices, including obtaining licenses for international sales and revising contracts to address the court’s concerns. These actions demonstrated a commitment to adhering to legal requirements.
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Ripple Executives Speak Out
Stuart Alderoty publicly voiced his concerns regarding the SEC’s demands. He emphasized the lack of fraud or recklessness allegations in the case and pointed out that Ripple had already prevailed on significant issues. Alderoty characterized the SEC’s financial requests as intimidation against the cryptocurrency market in the U.S.
Ripple CEO Brad Garlinghouse also weighed in, stating that Ripple filed its response on the same day two SEC lawyers resigned for misconduct. The XRP community is also firmly behind the company.
XRP is trading at $0.5528, up 1.12% over the past 24 hours. XRP also shows a 26.14% increase in trading volume over the same period. XRP is up over 11% over the past week, and many anticipate a strong performance if Ripple holds its ground against the SEC.
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