The U.S. Securities and Exchange Commission (SEC) has opposed Ripple Labs’ proposal to pay a $10 million fine for selling XRP to institutional investors. The regulator insists on $2 billion.
In its motion, the SEC stated that Ripple’s proposed penalty is a “slap on the wrist.”
“It would encourage other crypto asset issuers to violate [rules], making such activities extremely profitable while depriving investors of the disclosures required by Congress. Such actions would simply become ‘a cost of doing business’,” the documents state.
In December 2020, the Commission filed a lawsuit against the firm, accusing it of selling unregistered securities in the form of XRP worth approximately $1.3 billion.
In July 2023, Judge Analisa Torres ruled in favor of Ripple. She determined that programmatic sales and other distributions of the token do not constitute an offer and sale of investment contracts. However, according to the verdict, sales of the coins to major industry players violated U.S. securities laws.
In a recent statement, the SEC also questioned Ripple’s good faith, noting the risks of further legal violations by the company. The agency believes the firm attempted to “downplay its responsibility while emphasizing its cooperation with authorities” since the initial offering of XRP in 2013.
The Commission noted that Ripple’s licenses in other jurisdictions should not influence the court’s opinion:
“This argument is absurd. It is akin to claiming that a New York restaurant does not need a liquor license because it has a fishing license in California.”
Ripple’s Chief Legal Officer Stuart Alderoty criticized the regulator’s statement, noting its inability to “apply the law in good faith in an attempt to confuse the judge.”
And just when you think the SEC can’t sink any lower, if you are a financial regulator outside the U.S. and have done the hard work of establishing comprehensive crypto licensing frameworks, know that the SEC has no respect for you and thinks you are handing out the equivalent of… pic.twitter.com/7qZQIkyrH4
— Stuart Alderoty (@s_alderoty) May 7, 2024
“It seems the SEC can’t sink any lower, but if you are a financial regulator outside the U.S. and have done the hard work of establishing a comprehensive system for cryptocurrencies, know that the Commission does not respect you and thinks you are handing out the equivalent of fishing licenses,” he stated.
In February, Ripple investors filed an updated class action lawsuit against the company, accusing it of violating securities laws.
In the same month, a court ordered the firm to provide financial documents at the SEC’s request.