Ripple Throws Support Behind Terraform Labs, Criticizing SEC’s $4.47 Billion Fine as Excessive
Terraform Labs is pushing back against the SEC’s demand for a $4.47 billion penalty, arguing that their financial constraints make it impossible to pay more than $10 million.
Ripple Labs Inc. has joined forces with Terraform Labs in challenging the settlement fine imposed by the US Securities and Exchange Commission (SEC). The SEC is seeking $420 million in civil penalties and $3.58 billion in disgorgement from Terraform Labs and its founder, Do Kwon. This stems from allegations that Kwon and his previous company misled investors about their bitcoin products, resulting in losses of $40 billion.
In response to the SEC’s proposed payment amount, Ripple has filed a Notice of Supplemental Authority, highlighting that the SEC’s penalty request is disproportionate compared to similar cases. Ripple argues that the SEC typically imposes civil penalties ranging from 0.6% to 1.8% of total revenue, with the most severe cases warranting the higher end of that range. Given Terraform Labs’ circumstances, Ripple believes that a penalty closer to $10 million would be more appropriate.
Unlike other cases involving significant losses and fraud allegations, Terraform Labs’ situation is unique. The company’s financial situation, with only $75 million in Assets Under Management and facing bankruptcy, further supports their argument for a reduced penalty.
Coinbase’s Chief Legal Officer, Paul Grewal, has also questioned the SEC’s settlement demand, suggesting that $7 million would be a more reasonable figure. The outcome of this case could have implications for future disputes related to SEC regulations, including Ripple’s ongoing legal battle with the commission.
As of the latest update, XRP is trading at $0.479, reflecting a 1.53% decrease in the past 24 hours and an 8.16% decline over the previous week, signaling a bearish trend. Despite this, Ripple’s CEO has hinted at a potential resolution to the SEC case on September 21.
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