Ripple Labs will pay $125 million, but closing the case could allow Ripple to flourish
A federal judge has ruled that Ripple Labs must pay a $125 million civil penalty in a case brought against the company by the Securities and Exchange Commission (SEC). The decision, released yesterday by Judge Analisa Torres in the US District Court for the Southern District of New York, comes as part of the ongoing legal battle between Ripple and the financial regulator, which has lasted several years.
The judge found Ripple liable for the hefty penalty after determining that 1,278 transactions conducted by the company violated Section 5 of the Securities Act. The SEC had initially sought a penalty ranging from $10 million to as much as $2 billion, but the court ultimately settled on the $125 million figure, which Ripple is required to pay within 30 days.
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
In addition to the financial penalty, Judge Torres issued an injunction that permanently restrains Ripple from violating US securities laws in the future. While the judge acknowledged that some of Ripple’s sales after the SEC filed its complaint may not have broken federal law, she expressed concern that the company’s actions suggested a likelihood of future violations.
Ripple CEO Brad Garlinghouse responded to the ruling by describing it as a victory for the company and the broader cryptocurrency industry. He noted that the court significantly reduced the SEC’s proposed penalty and expressed optimism about Ripple’s future. The company’s CLO, Stuart Alderoty, echoed these comments, stating that Ripple respects the court’s decision and is ready to move forward.
This ruling marks a significant step toward concluding the SEC’s lawsuit against Ripple, which began in December 2020. The regulator had accused Ripple of using its XRP token as an unregistered security to raise funds. Following the ruling, the price of XRP saw a notable increase, rising from $0.50 to $0.62, signaling a positive market reaction to the news.
