Ripple, embroiled in a long-standing legal battle with the United States Securities and Exchange Commission (SEC) over the classification of XRP, has invoked a recent SEC settlement with Terraform Labs in its ongoing case. The SEC had recently reached a $4.5-billion settlement with Terraform Labs, prompting Ripple's legal team to argue for a more modest civil penalty in its own case.

In a filing dated June 13, submitted to the U.S. District Court for the Southern District of New York, Ripple's lawyers presented a notice of supplemental authority. They highlighted the disparity between the SEC's proposed penalties in different cases, pointing out that similar cases have seen penalties ranging from 0.6% to 1.8% of gross revenues. Ripple contends that a civil penalty exceeding $10 million, as sought by the SEC, would be disproportionate given the absence of fraud allegations and significant losses to institutional buyers.

The SEC's initial demands against Ripple include approximately $2 billion in disgorgement, prejudgment interest, and civil penalties. Ripple has consistently advocated for a penalty not exceeding $10 million, citing precedents set in cases involving Block.one, Genesis Global Capital, and Telegram, albeit redacting specifics about its own gross revenue.

Ripple's legal strategy underscores the significance of the SEC's settlement with Terraform Labs, where the penalty imposed was significantly lower relative to the size of the settlement. This contrast forms the basis of Ripple's argument for a more lenient civil penalty in its ongoing litigation.

The case against Ripple commenced in December 2020, with the SEC alleging that the blockchain company utilized XRP as an unregistered security to raise funds. Despite a notable legal development in July 2023, when Judge Analisa Torres ruled that XRP was not a security regarding its programmatic sales on exchanges, the litigation has persisted.

While the SEC dropped charges against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen in October 2023, signaling potential discussions for remedies, the main trial's resumption remains uncertain. Originally scheduled for April, the trial was adjourned without a set date in October 2023, leaving the timing of its continuation uncertain at present.