Ripple, the San Francisco-based blockchain company behind the cryptocurrency XRP, filed its opposition to the Securities and Exchange Commission’s (SEC) demand that the company pay nearly $2 billion in fines and penalties in a late Monday court filing.
In its rebuttal, Ripple said the court should levy a civil penalty of not more than $10 million.
XRP Lawsuit: $2 Billion Or $10 Million?
Ripple has countered the Securities and Exchange Commission’s proposal seeking close to $2 billion from the fintech company.
Last month, the SEC said it wanted Ripple to fork out $2 billion, including $876 million in disgorgement, a civil penalty of $876 million, and $198 million in prejudgement interest, in its proposed final judgment.
In a 186-page court response on April 22, Ripple argued that the finance watchdog has the burden to prove that the firm will violate federal securities laws in the future. Moreover, the company’s legal team contends that its institutional sales did not show “reckless disregard” for the law, mentioning its interactions with other American regulators.
“Our opposition to the SEC’s request for $2B in penalties for legacy institutional sales is now public,” Ripple’s legal head Stuart Alderoty posited in an X post. “In a case that had no allegations (or findings) of recklessness or fraud, and in which Ripple won on significant issues, the SEC’s ask is just more evidence of its ongoing intimidation against all of crypto in the U.S.”
“We remain confident that the Judge will approach this final remedies phase fairly,” Alderoty concluded.
Addressing the SEC’s demand for disgorgement, Ripple claims that the request is unwarranted because the regulator did not demonstrate that the company’s institutional sales caused any “pecuniary harm” to investors. Regarding the civil penalty, Ripple asserts that it should be closer to $10 million.
“The Court should deny the SEC’s requests for an injunction, for disgorgement, and for pre-judgment interest, and should impose a civil penalty of no more than $10 million,” Ripple said in the opposition motion.
Ripple revealed that it has changed the way it sells XRP after July 2023’s court ruling.
“Ripple has publicly acknowledged that ruling, and does so again now. It has changed the way it sells XRP and changed its contracts to avoid the problems identified by this Court,” the company said Monday.
Is XRP Lawsuit Nearing End?
Ripple and the SEC have been embroiled in a courtroom showdown since December 2020, when the regulator slapped the fintech company with a $1.3 billion lawsuit for allegedly selling unregistered securities in the form of XRP.
But last year, Ripple notched a groundbreaking victory in the courts against the SEC when Judge Analisa Torres ruled that programmatic sales of XRP to retail investors did not qualify as securities.
Ripple’s response to the SEC’s penalty demand comes at an opportune time. According to a recent report from Bloomberg, Michael Welsh and Joseph Watkins, two SEC lawyers, have been forced to resign following a federal judge’s sanctions against the Commission for committing “gross abuse of power” in the Debt Box case.
The attorneys presented “materially false and misleading representations” in order to obtain the temporary restraining order against the Utah-based crypto company.
U.S. lawyer James “MetaLawMan” Murphy highlighted what investors can expect next. In his opinion, Judge Torres has not set a deadline to give her decision. “But, I would expect that this decision will come substantially quicker than the summary judgment rulings. Best guess would be 60 to 90 days after the last brief (May 6).”
At the time of writing, the XRP price is up 2.3% over the last 24 hours, hovering around $0.55.
