SEC Rejects Ripple's Lower Fine Proposal in Ongoing XRP Lawsuit

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SEC seeks $2 billion penalty against Ripple, rejecting $10 million counterproposal, intensifying legal battle over XRP sales.

In the ongoing legal tussle between the Securities and Exchange Commission (SEC) and Ripple, the SEC has taken a firm stance against Ripple's proposed $10 million fine, arguing for a much larger penalty of nearly $2 billion.

The SEC minced no words, criticizing Ripple's suggested fine as inadequate to deter future violations. They expressed concerns that a lenient penalty would incentivize companies to flout securities laws, potentially harming investors who rely on accurate information mandated by Congress.

This clash dates back to 2020 when the SEC filed a lawsuit against Ripple, alleging that its sale of XRP amounted to unregistered securities offerings, raising a whopping $1.3 billion. While a judge ruled last year that some XRP sales didn't breach securities laws due to a specific sales process, direct sales to institutional investors were deemed securities offerings.

The SEC contends that Ripple raked in significant profits from these security-like sales, while Ripple maintains it has adjusted its sales practices post-court ruling.

Another bone of contention is Ripple's reliance on licenses obtained in foreign jurisdictions to assure future compliance. However, the SEC has dismissed these assurances, arguing that licenses not recognizing XRP sales as securities offerings hold no water in the realm of US regulations. They equated this logic to a New York restaurant needing a liquor license, not a fishing license from another state.

Ripple's Chief Legal Officer, Stuart Alderoty, fired back, slamming the SEC's disregard for established crypto licensing frameworks abroad. He contended that the SEC's comparison of these licenses to irrelevant fishing permits undermines the legitimacy of recognized regulatory efforts in other countries.

As the legal proceedings unfold, the outcome could significantly impact not only Ripple but also the broader cryptocurrency industry.