The agency stated that Terraform Labs was fined a lower percentage because it agreed to several relief measures, including burning all of its remaining tokens.
The US Securities and Exchange Commission (SEC) has reduced its proposed settlement amount for Ripple from $2 billion to $102.6 million, according to a legal document dated June 14, 2024, shared by defense lawyer James Filan.
The latest development came one day after Ripple filed a notice of supplemental authority, arguing that the SEC’s requested $2 billion penalty is unreasonable.
In its filing, Ripple cited the Terraform Labs case and previous SEC settlements as benchmarks for a fair amount. Terraform reached a $4.4 million settlement with the SEC on Thursday.
Ripple argued that the SEC had agreed to penalties between 0.6% and 1.8% of the defendant’s revenue in past cases. The company has proposed to pay $10 million to resolve the dispute.
In its new filing, the SEC said that Ripple’s comparison is flawed and not applicable. The SEC also explained that Terraform Labs was penalized a lower percentage because the company was in bankruptcy and agreed to several relief measures, including burning all of its remaining tokens. Ripple has not agreed to any such terms, according to the SEC.
“Ripple fails to note that the corporate defendant there is in bankruptcy, going “out of business for good,” burning the keys to all of its crypto asset securities, agreeing to return a significant amount to investors in those securities, and removing two of the board members in charge at the time of the violations,” the SEC stated.
“The SEC took all these factors in agreeing to a settlement, and repeatedly cited them as the facts relevant for the court to approve the settlement under applicable law,” the SEC added. “Ripple is agreeing to none of this relief—in fact, Ripple is agreeing to nothing.”
The SEC concluded that it seeks to settle with Ripple at $102.6 million, which is considered significantly lower than a previously discussed penalty but still deemed necessary to deter future misconduct.
The legal battle between the SEC and Ripple has been ongoing since December 2020, when the SEC alleged that XRP, Ripple’s native token, was an unregistered security.
While a judge ruled in July 2023 that XRP was not a security in programmatic sales and the SEC dropped charges against Ripple’s executives, the lawsuit against Ripple persists, with the trial date yet to be determined.