Ripple Labs’ chief legal officer, Stuart Alderoty, revealed that the U.S. Securities and Exchange Commission (SEC) has urged a federal judge to impose a staggering $2 billion penalty against the blockchain firm. This request, made as part of a filing under seal until March 26, marks a significant escalation in the ongoing civil case between Ripple and the SEC, which commenced in 2020.
Alderoty criticized the SEC’s punitive approach, accusing the regulator of seeking to punish and intimidate Ripple and the wider industry rather than applying the law faithfully. Ripple intends to file a response to the SEC’s request in April, denouncing the regulator’s alleged dissemination of false and misleading statements.
Ripple CEO Brad Garlinghouse expressed disbelief at the SEC’s demand for a $2-billion penalty, asserting that there is no precedent for such a severe financial sanction. He vowed to continue challenging the SEC’s actions and exposing what he perceives as the regulator’s overreach and misconduct.
The SEC filed a lawsuit against Ripple, Garlinghouse, and co-founder Chris Larsen in December 2020, alleging the unlawful sale of $1.3 billion worth of XRP tokens as unregistered securities. However, a ruling by Judge Analisa Torres in July 2023 deemed XRP not to be a security in certain contexts, leading the SEC to drop charges against Garlinghouse and Larsen with prejudice in October 2023. Despite this, the legal battle between Ripple and the SEC continues to unfold, reflecting broader regulatory challenges facing crypto firms in the United States.
The SEC’s litigation against Ripple is part of its broader crackdown on the crypto industry, with civil lawsuits also targeting prominent platforms such as Coinbase, Binance, and Kraken. This regulatory scrutiny underscores the complex legal landscape confronting blockchain-based enterprises operating within the United States.
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