Ripple hits back against SEC's 'unfair' $2 billion penalty, accusing regulator of disrespecting international standards: Finance: Business Times

The long-running legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has reached a critical juncture, with both sides fiercely contesting appropriate sanctions and injunctions in their final briefs. The SEC is pushing for a whopping $2 billion penalty against Ripple, arguing that the company’s sale of XRP to institutional investors violated securities laws, while Ripple countered with a significantly lower proposal of $10 millions of dollars.

In its latest filing, the SEC called Ripple’s $10 million counterproposal a mere “slap on the wrist,” saying such a lenient penalty would only encourage other crypto asset issuers to violate Article 5 of the Securities Act. The regulator’s lawyers argued that Ripple’s proposed penalty would make violating securities laws a “remarkably lucrative business” for companies, thereby depriving investors of the disclosures required by Congress.

The SEC’s relief brief also sought permanent injunctions against Ripple, asserting that there is a “reasonable probability” that the company will repeat its alleged wrongdoing. The regulator rejected Ripple’s assurances of compliance, stating that the company’s primary business continues to be “unregistered sales of XRP”, as has been the case since 2013.

Ripple’s chief legal officer, Stuart Alderoty, lashed out at the SEC after the appeal filing was released, accusing the regulator of disrespecting international regulatory standards and attempting to mislead the court. “And just when you think the SEC can’t go any lower, if you’re a financial regulator outside the United States and you’ve worked hard to establish comprehensive crypto licensing frameworks, know that the SEC has no respect for you and thinks you are handing out the equivalent of fishing licenses,” Alderoty said in a post on X (formerly Twitter).

The SEC’s request for a $2 billion penalty is based on the millions in profits Ripple allegedly earned from its unregistered sales of XRP. The regulator also criticized Ripple’s assurances to the court that it would not violate the law in the future, likening the company’s argument to “saying a New York restaurant doesn’t need to get a liquor license because he got a fishing license in California.”

As the legal battle comes to a head, Judge Analisa Torres of New York will have the final say on the competing claims from Ripple and the SEC. In a previous ruling last year, Judge Torres determined that some of Ripple’s programmatic XRP sales did not violate securities laws due to a blind offering process in place, while others direct sales to institutional investors were considered securities.