- Ripple highlights SEC’s inconsistent penalties: 1.27% for TerraForm vs. 20x higher for Ripple without fraud.
- Ripple’s Notice of Supplemental Authority underscores SEC’s perceived bias and excessive penalty demands.
- SEC’s treatment of Ripple contrasts sharply with TerraForm’s, emphasizing alleged animus and unfair enforcement.
Ripple Labs has accused the Securities and Exchange Commission of pursuing disproportionately harsh penalties against the company compared to other crypto-related cases. In a recent filing, Ripple cited the recent Terraform Labs settlement as evidence of this disparity.
Ripple’s filing emphasizes that in other cases, the SEC has accepted penalties ranging from 0.6% to 1.8% of a defendant’s gross sales. In the Terraform Labs case, where a jury found one of the largest securities frauds in U.S. history, the SEC accepted a penalty amounting to 1.27% of Terra’s gross sales.
As further noted by pro-XRP lawyer Bill Morgan, the fraud in question involved two long-running schemes that wiped out $40 billion of investor funds. In contrast, Ripple faces a proposed penalty of $876 million, which it claims is 20x higher than penalties in similar cases. Notably, there are no allegations of fraud against Ripple, and institutional buyers did not suffer any losses.
Despite this, the SEC is pushing for an excessively high penalty. Ripple is arguing for a $10 million penalty instead, aligning with the typical range seen in other cases. This discrepancy underscores what Ripple perceives as the SEC’s biased behavior towards the company.
The Notice of Supplemental Authority filed by Ripple is a strategic move to emphasize the SEC’s inconsistent enforcement actions. By drawing parallels with the Terraform Labs case, Ripple seeks to highlight the unreasonableness of the penalties being pursued against it. This tactic mirrors the SEC’s own strategies, as seen in their previous references to the Terraform Labs ruling in other cases.
Moreover, the SEC’s pursuit of such a high penalty against Ripple stands in contrast to its treatment of other companies. For example, the SEC pushed Terraform Labs to pay $3.6 billion in disgorgement and a $420 million civil penalty, that is just 1.27% of the company’s $33 billion gross sales. Ripple argues that the SEC’s approach in its own case is far from the norm.
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