Ripple, a prominent San Francisco-based blockchain company, has opposed the SEC’s attempt to penalize it with nearly $2 billion. This fine is recompense for alleged violations related to the sale of its XRP tokens. James K. Filan, a well-known crypto lawyer, shared this development.
Ripple Opposes SEC Fine
The SEC’s initial proposal sought a hefty fine of $1.95 billion. This included a civil penalty of $876.3 million, disgorgement of the same amount, and additional prejudgment interest.
In response, Ripple presented three main arguments to challenge the SEC’s demands. Firstly, Ripple contested the necessity of an injunction, asserting that the SEC failed to provide sufficient grounds to justify its imposition.
They argued that there was no reasonable basis for predicting future violations in Ripple’s institutional XRP sales. Secondly, Ripple challenged the need for disgorgement, citing legal precedents such as the 2020 Govil lawsuit and the Liu ruling.
The SEC continues to lose. The Second Circuit Court of Appeals refused to reconsider their decision in Govil which held that if a buyer suffers no financial loss, the SEC is not entitled to disgorgement from the seller. https://t.co/AOEHcyiajo pic.twitter.com/TPCbmAcAmY
— Stuart Alderoty (@s_alderoty) April 11, 2024
The company highlighted the absence of possible financial harm to investors. It proposed that any disgorgement should be limited to net profits, with legitimate business expenses deducted.
Lastly, Ripple advocated for a significantly reduced civil penalty, arguing that the SEC’s proposed amount of $876 million was excessive. It maintained that the circumstances of the case warranted a penalty closer to $10 million, aligning more reasonably with the facts presented.
Ripple’s opposition brief primarily aimed to weaken the SEC’s claims and secure a more favorable outcome in the ongoing legal battle.
Meanwhile, The SEC is gearing up to respond to Ripple’s opposition brief regarding remedies on May 6, 2024. Following this, the court will make its ultimate decision. Ripple’s Chief Technology Officer, David Schwartz, is anticipating a resolution by the end of the year, echoing earlier reports.
SEC Sanctioned for Misconduct
Meanwhile, the SEC has been dealing with criticism due to its use of agency status to justify actions taken on crypto firms.
Last month, U.S. District Judge Robert Shelby took significant action against the agency. This came after serious accusations of misconduct related to their legal pursuit of a Utah-based cryptocurrency company called DEBT Box.
The judge found that the SEC had abused its authority in handling the case, which garnered attention due to the defendants’ claims. They stated that the SEC had distorted important facts to obtain a temporary freeze on assets within the crypto platform.
After DEBT Box’s lawyers raised concerns about the SEC’s conduct, Judge Shelby demanded an explanation from the agency. Following this, the SEC acknowledged making mistakes but requested leniency from the judge, hoping to avoid formal punishment.
However, Judge Shelby was not swayed by the SEC’s plea and instead pointed out several instances of what he termed “bad faith” behavior. He held the agency responsible for its actions, emphasizing that its conduct had severely damaged the integrity of the legal proceedings and the judicial system.
This month, April, the action led to the resignation of two SEC lawyers, Michael Welsh and Joseph Watkins. For them, leaving the agency was inevitable, seeing that they had already gotten a termination warning from an SEC official.