Ripple’s legal team is leveraging a recent consent judgment involving TerraForm Labs to contest the Securities and Exchange Commission’s (SEC) demands. The company has filed a notice of supplemental authority, drawing parallels between its case and the SEC’s actions against TerraForm Labs, the entity behind the infamous Luna cryptocurrency.
Recently, a significant settlement was reached in the SEC’s case against TerraForm Labs, with the U.S. District Court for the Southern District of New York ruling that the company must pay a $4.47 billion fine for orchestrating “one of the largest securities frauds” in U.S. history. Additionally, former CEO Do Kwon was ordered to repay over $204 million. TerraForm Labs was found guilty of inflating transaction data and manipulating token prices, leading to investor losses exceeding $40 billion.
Ripple’s Argument
Ripple’s legal team is using this judgment to argue against the SEC’s proposed $2 billion penalty for its institutional sales of XRP. Ripple contends that the penalty sought by the SEC is disproportionately high compared to sanctions in similar or even more severe cases. Ripple highlights that the $420 million civil penalty imposed on TerraForm Labs represents approximately 1.27% of the company’s $33 billion in total sales. In contrast, the SEC is seeking a much higher proportion in the “XRP case,” despite no allegations of fraud or significant losses to institutional buyers.
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Ripple argues that the SEC’s request is unprecedented and unreasonable, suggesting that a fair civil penalty should not exceed $10 million. By spotlighting the TerraForm Labs judgment, Ripple aims to illustrate the inconsistencies in the SEC’s approach to penalties and seeks a more equitable resolution.
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