The Securities and Exchange Commission is moving to penalize Ripple Labs for violations of federal securities regulations, Reuters reports.
Ripple Chief Legal Officer Stuart Alderoty posted on X that the SEC is seeking fines and penalties against the company totaling $2 billion.
The case began in December 2020, when the SEC filed a lawsuit against Ripple Labs Inc. and two of its executives, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering involving the cryptocurrency XRP.
Ripple also allegedly distributed billions of XRP in exchange for non-cash consideration, such as labor and market-making services. The complaint alleges that the defendants failed to register their offers and sales of XRP or satisfy any exemption from registration, in violation of the registration provisions of the federal securities laws.
According to Alderoty’s post, the SEC asked U.S. District Judge Analisa Torres in Manhattan to impose the fines and penalties. “Rather than faithfully apply the law, the SEC remains bent on wanting to punish and intimidate Ripple – and the industry at large,” Alderoty said.
Last July, Torres’ ruled Ripple’s sale of XRP worth $728.9 million to hedge funds and other sophisticated buyers amounted to unlawful sales of unregistered securities. But she also ruled that XRP Ripple sold on public cryptocurrency exchanges did not meet the legal definition of a security.
The SEC’s proposal for penalties asks the court to order Ripple Labs to pay $876 million in disgorgement, $198 million in prejudgment interest, and $876 million civil penalty, amounting to a total of $1.95 billion.
“The SEC asks the Court to consider how easily actors, particularly in the crypto asset space, can today engage in the same sort of conduct as Ripple’s and send a strong message that such abuses will not be tolerated,” the filing said.
The SEC filing said that the defendant’s response shall be filed no later than April 22.
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