Important Ripple v SEC Update July 3
TL;DR
- Ripple uses a recent Binance ruling to argue against harsh penalties in their SEC lawsuit, citing regulatory uncertainty.
- The agency has reduced its proposed penalty from $2 billion to $102.6 million, while the company argues for a maximum fine of $10 million.
Ripple on the Move
The legal confrontation between Ripple and the US Securities and Exchange Commission (SEC) has witnessed numerous developments as of late.
Most recently, the company filed a Notice of Supplemental Authority regarding a recent decision related to crypto exchange Binance. Last week, Judge Amy Jackson dismissed the regulator’s claims that secondary market sales of Binance’s BNB token constituted securities transactions.
Ripple seemingly intends to use that ruling in its favor. The firm’s legal counsel, Michael Kellogg, argued that the recent magistrates’ decision supports Ripple’s case that its alleged illegal sales of XRP do not warrant “harsh remedies” as the agency claims.
“This observation supports Ripple’s argument that providing clarity on the legality of the different types of sales of XRP was the most significant aspect of the Court’s summary judgment decision…
The lack of regulatory clarity prior to that ruling, in turn, supports Ripple’s position that the Court’s finding of a strict liability violation on some of Ripple’s sales – but far fewer than the SEC alleged were violations – does not reflect reckless disregard for the law or warrant harsh remedies. And, of course, the SEC did not even allege recklessness as to Ripple in its Complaint,” the letter reads.
Developments surrounding the longstanding lawsuit between the company and America’s securities regulator have often reflected on XRP’s market performance. The token’s price headed north following the filed letter and remains slightly in the green on a daily scale. In comparison, other leading cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH), have tanked substantially in the past 24 hours.
The Bone of Contention
One of the major issues related to the case’s possible resolution is the size of Ripple’s penalty. The SEC initially sought a staggering $2 billion fine, while the firm claimed the amount should not exceed $10 million.
Ripple compared the lawsuit with the one between the regulator and Terraform Labs, saying direct allegations of fraud were only evident in the one against the defunct crypto company.
Shortly after, the SEC softened its tone, proposing a $102.6 million penalty:
“Ripple avoids comparing the Terraform settlement’s penalty to the gross profit of the violative conduct. That ratio ($420 million/$3.587 billion) is significantly higher: 11.7%. Applying it to the $876.3 million in gross profits, the SEC here asks the court to disgorge, which results in a much larger figure, a $102.6 million penalty, than the $10 million ceiling Ripple insists on.”
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