Ripple Challenges SEC's Remedies, Opposes $876 Million Disgorgement and $198 Million Penalty

Ripple Labs has filed an opposition to the SEC's request for $876 million in disgorgement and $198 million in prejudgment interest, denying the allegations. Ripple proposes a $10 million civil penalty and argues that the SEC failed to establish likelihood of future violations or reckless disregard for the law, that disgorgement is barred by Govil, and that the civil penalty should be limited to $10 million based on precedents in similar cases.

Ripple Disputes SEC's Proposed Remedies in XRP Lawsuit

In a pivotal development in the long-running lawsuit between the Securities and Exchange Commission (SEC) and Ripple Labs, the embattled cryptocurrency company has filed an opposition to the SEC's motion for remedies and entry of final judgment.

The SEC had sought $876,308,712 in disgorgement and $198,150,940 in prejudgment interest from Ripple. However, Ripple vehemently disputes these figures and has proposed a maximum penalty of $10 million instead.

Ripple's Defense: Hostile Ignorance and Unproven Future Violations

In its opposition brief, Ripple presents three primary arguments to counter the SEC's remedial requests:

1. Lack of Evidence for Future Violations: Ripple asserts that the SEC has failed to demonstrate a likelihood of future violations by the company. It argues that Ripple has taken significant steps to rectify past issues and has no intention of violating securities laws in the future.
2. Disproportionate Disgorgement: Ripple contends that the SEC's disgorgement request is excessive and unsupported by the evidence. It maintains that the SEC cannot show pecuniary harm to investors and that Ripple's legitimate business expenses should be deducted from any potential disgorgement.
3. Exorbitant Civil Penalty: Ripple argues that the SEC's proposed civil penalty of $876,308,712 is disproportionate to the company's alleged violations. It points to other digital asset cases where the SEC has imposed much lower penalties and argues that its actions should be consistent with precedent.

Ripple's Changed Conduct and Licenses

Ripple emphasizes that it has made significant changes to its XRP sales practices in response to the court's rulings. It has obtained licenses to sell XRP outside the United States and has revised its contracts to address potential legal issues.

SEC's Administrative Overreach

Ripple further accuses the SEC of administrative overreach by seeking an injunction based on mere speculation that the company may break the laws in the future. It argues that such an injunction would be punitive and would stifle innovation in the cryptocurrency industry.

Upcoming Proceedings

The SEC is expected to file a reply brief under seal by May 6th. Letters supporting or opposing the sealing of details in the filings are due by May 20th. The closing bell for this protracted legal battle is anticipated in the near future, with the court issuing its final judgment potentially shaping the future of the XRP cryptocurrency and the regulatory landscape for digital assets.