The dispute between Ripple and the SEC over alleged securities law violations is growing more intense. With new information coming to light, it seems this court case may not be reaching a resolution soon, as Ripple and the SEC strongly disagree on the proper penalty for the infraction.
Ripple Proposes $10 Million Fine Instead
Instead of Ripple agreeing with the SEC’s request for a penalty up to $1.95 billion for its institutional XRP sales, they are proposing that the court impose a penalty no greater than $10 million. This suggested penalty is significantly lower than what the SEC has proposed.
The SEC suggested that Ripple should pay a fine of $876,308,712 as a civil penalty, along with an additional $198,150,940 in prejudgment interest and $876,308,712 in disgorgement of profits for breaking securities laws. But Ripple requested the court to dismiss their demands for disgorgement and pre-judgment interest, and instead focus solely on the penalty, which they argued should not exceed $10 million.
Ripple’s legal team presented reasons why the civil penalty should not exceed $10 million. They argued that since the Securities and Exchange Commission (SEC) hasn’t accused Ripple of fraud, deceit, or manipulation, and failed to demonstrate that Ripple intentionally disregarded the law, the lower tier of statutory penalties applies.
Ripple contended that the proposed civil penalty of over $876 million by the Commission isn’t fitting for the initial tier of their offense. Instead, they suggested that only the revenue from pre-complaint institutional sales should be taken into account when determining an acceptable remedy, resulting in a more suitable civil penalty of around $10 million.
Accounting Error From The SEC
Ripple argued that the SEC had made a calculation mistake when determining the crypto company’s earnings for the penalty assessment. The legal team asserted that the SEC neglected to review or take into account any other expense categories for Ripple.
In simpler terms, Ripple asserts that the SEC failed to provide any proof or reasoning behind considering only revenue as deductible expenses for Ripple’s fiscal penalty calculation. Essentially, Ripple is saying that the SEC didn’t take into account the significant costs incurred by the company before determining that a $2 billion fine was justified.
Ripple’s legal team argued that the SEC made a mistake by using the testimony of Andrea Fox, an accountant at the agency, without properly identifying her as an expert witness. They asserted that the SEC failed to disclose Fox during the initial discovery or supplemental remedies discovery process, and she was not deposed. Consequently, they requested that Fox’s declaration be excluded due to being submitted late as an “expert report presented untimely.”
Ripple Also Opposes SEC’s Proposed Injunction
In its final hearing submission, the SEC requested the court to issue a permanent order preventing Ripple from engaging in either direct or indirect unregistered sales of Institutional Sales. Realizing potential implications for their On-Demand Liquidity (ODL) transactions, Ripple has asked the court to reject this injunction request instead.
The crypto company contends that the Securities and Exchange Commission (SEC) has not provided sufficient reason for granting an injunction against them. Injunctions are typically issued when there’s a risk of further breaches in the future. However, Ripple asserts that the SEC has not demonstrated a “significant chance” or “probability” of such future violations.
The lawyers for the crypto company explained that Rippe has adapted its methods for selling XRP and modified its contracts to prevent any potential infringements in the future. To demonstrate their commitment, they provided a statement from Ripple’s President, Monica Long, detailing the actions taken by the company to avoid violations in the future.
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2024-04-23 14:10