SEC Proposes Nearly $2 Billion in Penalties for Ripple in XRP Case

In a recent filing with the U.S. District Court, the Securities and Exchange Commission (SEC) proposed significant fines and penalties for blockchain firm Ripple, totaling approximately $1.95 billion. The SEC alleges that Ripple violated securities laws by selling unregistered tokens and has proposed a $1.9 billion payment to rectify the situation, which includes disgorgement, prejudgment interest, and a civil penalty.

SEC Proposes Substantial Fines and Penalties for Ripple in XRP Case

The United States Securities and Exchange Commission (SEC) has filed a detailed brief outlining proposed sanctions against blockchain firm Ripple, alleging that the company has defied the law by continuing to sell XRP tokens after legal warnings.

According to the SEC filing in U.S. District Court for the Southern District of New York, Ripple is facing disgorgement of $876,308,712, prejudgment interest of $198,150,940, and a civil penalty of $876,308,712, totaling approximately $1.95 billion. The regulator argues that these penalties are warranted given Ripple's "defiance of the law" and its failure to cease XRP sales despite legal objections.

"Ripple is well-positioned to pay a significant civil penalty," the SEC asserted. "A civil penalty should not be merely the cost of doing business for a securities law violator, as the Second Circuit has held. Moreover, the need for deterrence is clear given Ripple's enormous amount of unregistered sales of XRP over the last three years."

The proposed penalties align with Ripple Chief Legal Officer Stuart Alderoty's earlier predictions of approximately $2 billion in fines and penalties. Alderoty characterized the SEC's intent as "punishment and intimidation," indicating that Ripple intends to file a response to the proposed judgment in April.

"Only a significant sanction from this Court and the return of the ill-gotten gains Ripple made from its violations will cause Ripple to correct its conduct," the SEC stated.

In its December 2020 lawsuit, the SEC alleged that Ripple raised $1.3 billion in unregistered securities through sales of XRP tokens. The case gained significant attention in the cryptocurrency industry after Judge Analisa Torres ruled in July 2023 that XRP was not a security regarding programmatic sales on digital asset exchanges.

The SEC's proposed penalties underscore the regulator's commitment to holding cryptocurrency companies accountable for alleged violations of securities laws. The ongoing Ripple case highlights the growing scrutiny faced by the cryptocurrency industry as it navigates the complex regulatory landscape.