SEC Demands Final Judgment, $2 Billion Penalties in Ripple Lawsuit

In the Ripple Labs SEC lawsuit, the SEC has filed a remedies-related brief seeking a final judgment against Ripple, including permanent injunctions, disgorgement, and civil penalties totaling nearly $2 billion. The brief argues that Ripple violated securities laws by conducting unregistered offerings of XRP and argues that Ripple's post-complaint XRP sales were mostly to institutions and harmed investors. Ripple executives have criticized the SEC for irrational statements and acting without faithful allegiance to the law.

SEC Demands Final Judgment and Penalties in Ripple Lawsuit

The United States Securities and Exchange Commission (SEC) has filed a remedies-related brief with the federal court, seeking a final judgment and substantial financial penalties against Ripple Labs Inc. The SEC's request includes permanent injunctions barring Ripple from further securities law violations, disgorgement of allegedly ill-gotten gains, prejudgment interest, and civil penalties totaling nearly $2 billion.

SEC's Allegations and Arguments

The SEC's brief contends that Ripple violated Section 5 of the Securities Act of 1933 by offering and selling unregistered digital asset securities in the form of XRP. According to the SEC, Ripple raised over $1.3 billion through these unregistered offerings, which were primarily sold to institutional investors.

The SEC argues that Ripple intentionally misled investors by characterizing XRP as a utility token rather than a security. The SEC also alleges that Ripple failed to disclose discounts offered to institutional investors and did not adequately safeguard investor funds.

Ripple Executives and Crypto Community React

Ripple executives and the cryptocurrency community have strongly criticized the SEC's remedies-related brief and other documents filed in the case. Ripple CEO Brad Garlinghouse dismissed the $2 billion penalty as "illogical" and "without precedent." He accused the SEC of gross abuse of power and a selective interpretation of the law.

Stuart Alderoty, Ripple's Chief Legal Officer (CLO), accused the SEC of engaging in intimidation tactics and attempting to punish Ripple and the industry as a whole. Alderoty stated that Ripple would file its response to the SEC's brief in late April.

SEC's Proposed Orders

In the proposed order submitted to the court, the SEC seeks the following penalties:

• $876,308,712 in disgorgement of allegedly ill-gotten gains
• $198,150,940 in prejudgment interest
• $876,308,712 in civil penalties

The SEC argues that these penalties are necessary to deter future securities law violations and to compensate investors who were allegedly harmed by Ripple's actions.

Negotiations and Potential Outcomes

Ripple is expected to submit its opposition to the SEC's proposed order in April, and the SEC will file its reply in May. Judge Analisa Torres has extended the deadline for these submissions.

Legal experts believe that the parties may engage in negotiations to avoid a full trial on the remedies issue. Judge Torres could also play a role in facilitating a resolution that is fair to both parties and the public interest.

XRP Price Movement

The release of the SEC's remedies-related brief and the reactions from Ripple executives have sparked increased interest in the cryptocurrency market. In the hours following the news, the price of XRP rose significantly, indicating that traders may be viewing the SEC's actions as a positive development for Ripple.

However, it is important to note that the outcome of the lawsuit remains uncertain, and the price of XRP could fluctuate significantly depending on the court's decision and any subsequent appeals.