Ripple has referenced Terra’s consent judgment in its recent filing in the SEC case to argue for a $10 million fine instead of the SEC’s proposed $2 billion penalty.
In a new filing submitted in the Southern District of New York, Ripple pointed to the recent Consent Judgment in the TerraForm Labs (TFL) case, where the SEC agreed to a disgorgement of over $3.58 billion and a civil penalty of $420 million.
Ripple compared the civil penalty in the TFL lawsuit to the SEC’s proposed fine of $2 billion for the sale of XRP to institutional investors. The penalty in the TFL case represents 1.27% of the defendants’ gross sales, amounting to $33 billion.
Unlike the Ripple lawsuit, the TFL case involved one of the largest securities frauds in U.S. history, resulting in the loss of $40 billion in investors’ funds. Ripple highlighted that TFL executives used fictitious data to attract investors while engaging in fraudulent practices to manipulate the token’s price.
Ripple also noted that the SEC typically requests a civil penalty between 0.6% and 1.8% in similar cases, but in their case, the regulator demanded a significantly higher penalty despite the absence of evidence of fraud and no losses incurred by institutional investors.
Top lawyers in the crypto community commented on the significance of Ripple’s filing, with pro-XRP lawyer Bill Morgan criticizing the SEC’s treatment of Ripple. Former securities lawyer Marc Fagel suggested that the leniency in the TerraForm settlement was due to its settlement status, emphasizing that the penalty was fictional and the funds might not be recovered.
CryptoQuant CEO Ki Young Ju questioned where TerraForm Labs would find the funds to settle with the SEC, considering it had depleted its reserves during the Terra collapse.
In the ongoing SEC v. Ripple lawsuit, while the SEC is seeking a nearly $2 billion fine, Ripple argued that the civil penalty should not exceed $10 million. The parties have submitted their filings, and the court’s final verdict is expected soon.
Ripple CEO Brad Garlinghouse estimated that the court would issue its final verdict before September 21, but it remains to be seen if his prediction will come true. This information is for informational purposes only and should not be considered financial advice. Readers are advised to conduct their research before making investment decisions.