In a significant legal development, the Securities and Exchange Commission (SEC) has officially filed its proposed final judgment in its case against Ripple Labs. The regulatory agency is seeking a staggering $1.9 billion judgment against the company. This high-stakes battle has far-reaching implications for the cryptocurrency industry.
The Background
The case began in December 2020, when the SEC filed suit against Ripple Labs and its executives. The allegations centered around the violation of federal securities laws through the sale of XRP to both institutional and retail customers. The legal wrangling has continued for years, with both sides presenting their arguments.
The SEC’s Proposal
The SEC’s proposal is bold and unyielding. It asks the court to order Ripple Labs to pay:
- Disgorgement: A hefty sum of $876 million.
- Prejudgment Interest: An additional $198 million.
- Civil Penalty: A staggering $876 million.
The total amount sought by the SEC stands at $1.95 billion. If the judge grants this motion, Ripple would be required to pay the full amount within 30 days after the judgment. Additionally, the company would be “permanently restrained and enjoined from, directly or indirectly, conducting an unregistered offering of Institutional Sales”.
Ripple’s Response
Ripple CEO Brad Garlinghouse and Chief Legal Officer Stuart Alderoty have been vocal in their criticism of the SEC. They accuse the regulatory agency of acting “outside the law” and being bent on punishing and intimidating Ripple and the broader industry. Garlinghouse promises that their response will be filed next month, but he also highlights the SEC’s history of making false and misleading statements.
The Broader Implications
Beyond the specifics of this case, the outcome will set a precedent for how regulators approach the crypto space. The SEC’s insistence on a billion-dollar penalty sends a strong message to other actors in the industry. It underscores the need for clarity and regulatory compliance in a rapidly evolving landscape.
