Ripple Backs Terraform Against SEC’s $4.47B Penalty
- Ripple supports Terraform Labs, calling the SEC’s $4.47 billion penalty unreasonable.
- Terraform Labs argues its penalty should not exceed $10 million due to financial constraints.
Ripple Labs Inc., which is urging the court to overturn the US Securities and Exchange Commission (SEC) settlement fine, is supporting Terraform Labs.
The SEC asked on June 12 that Terraform and its creator, Do Kwon, pay $420 million in civil penalties and $3.58 billion in disgorgement. Based on claims that Kwon and his previous company misled investors about their bitcoin products, resulting in losses of $40 billion, this raises the total settlement amount to $4.47 billion.
BREAKING: @Ripple files Notice of Supplemental Authority regarding TerraForm Labs Consent Judgment!
The SEC v. RIPPLE case could end ANYTIME! #XRP pic.twitter.com/4n5RF5SiHY
— JackTheRippler © (@RippleXrpie) June 13, 2024
BREAKING: Ripple’s Stance on the Penalty
The court found Kwon and Terraform Labs guilty of organizing one of the biggest securities frauds in American history. But at around 1.27% of Terraform’s $33 billion gross sale, the SEC’s payment proposal seems irrational to Ripple. Noting that the SEC has asked for smaller payments in more serious cases, Ripple submitted a notice of supplementary authority.
Most SEC civil penalties, according to Ripple, fall between 0.6% and 1.8%, with the most serious offenses carrying a 1.8% penalty. Ripple feels that Terraform Labs should be included in this group and that market watchers disagree with the SEC’s harsher penalty.
Furthermore, the Terraform Labs case has neither significant institutional investment losses nor fraud accusations.
Terraform Labs’ Financial Constraints
Citing its inability to pay the outrageous cost as a bankrupt company with $75 million in Assets Under Management (AUM), Terraform Labs contends that the penalty and disgorgement fee should not exceed $10 million.
Coinbase CLO Paul Grewal said $7 million is plenty and questioned the efficiency of the SEC’s settlement demand.
The result of this case might affect other lawsuits pertaining to SEC regulations, such as the three-year-old dispute involving Ripple.
Meanwhile, as of writing, the price of XRP is at $0.479, down 1.53% in the previous 24 hours and indicating a bearish stance over the previous 7 days, down 8.16%, according to CoinMarketCap data. On the other hand, CNF brought out that Ripple’s CEO hinted that the company’s SEC case may be over on September 21.
