A court fined Ripple $125 million in a protracted legal battle with the U.S. Securities and Exchange Commission (SEC). The regulator initially demanded $2 billion.
Judge Analisa Torres also prohibited the fintech company from future violations of securities laws, citing a “reasonable likelihood of future violations.”
Previously, Ripple sought to cap the fine at $10 million. The agency noted that this would be a “slap in the face” to regulatory bodies.
“The court reduced the SEC’s demands by ~94%, acknowledging they overplayed their hand. We respect the decision […]. This is a victory for Ripple, the industry, and the rule of law. We don’t know how the regulator will stand against the entire XRP community,” commented Ripple CEO Brad Garlinghouse.
The SEC asked for $2B, and the Court reduced their demand by ~94% recognizing that they had overplayed their hand. We respect the Court’s decision and have clarity to continue growing our company.
This is a victory for Ripple, the industry and the rule of law. The SEC’s…
— Brad Garlinghouse (@bgarlinghouse) August 7, 2024
This perspective was echoed by analyst and MN Trading founder Michaël van de Poppe.
Big news! $XRP lawsuit is settled!
The SEC asked for more than a billion in fines, but they only need to pay $125 million.
Big victory for Ripple and crypto. pic.twitter.com/LcMLwZd9b6
— Michaël van de Poppe (@CryptoMichNL) August 7, 2024
In comments to The Block, SEC representatives noted that the court granted the agency’s motions, including an injunction prohibiting Ripple from violating securities laws. They added that the fines were much larger than the firm proposed.
“As every court has noted, the law applies when companies offer and sell investment contracts, regardless of the technology or labels they use,” emphasized the official.
Following the court’s decision, XRP’s price shows a daily increase of 17.5%, according to CoinGecko. The cryptocurrency has nearly recovered losses from the previous seven days.
Ripple and the SEC have been in litigation since 2020, when the Commission accused Ripple of raising $1.3 billion through the sale of XRP as unregistered securities.
In July 2023, Judge Analisa Torres ruled in favor of the company.
She concluded that sales and other distributions of tokens do not constitute an offer and sale of investment contracts.
However, Ripple’s victory was not complete — according to the verdict, institutional purchases of coins exceeding $700 million violated U.S. laws.
The SEC attempted to challenge the court’s ruling, but Torres dismissed the agency’s interlocutory appeal. She found that the Commission did not provide sufficient evidence, and the arguments presented would not “materially advance the ultimate termination of the case.”
In October 2023, the regulator withdrew its lawsuit against co-founder Chris Larsen and Garlinghouse, accusing them of violating securities laws. At that time, Ripple’s Chief Legal Officer Stuart Alderoty noted that this marked the SEC’s third defeat in the litigation without any victories.