Ripple is urging the court to reconsider the Securities and Exchange Commission's (SEC) civil penalty, citing the recent settlement between the SEC and Terraform Labs. The SEC had reached a $4.47 billion settlement with Terraform Labs, which included a civil fine of $420 million, representing 1.27% of the company's gross sales. Ripple's lawyers argue that this settlement demonstrates the unreasonableness of the SEC's proposed civil penalty in their own case.

Ripple was sued by the SEC in 2020 for allegedly selling XRP as an unregistered security. While the court ruled that Ripple's automated sales of XRP did not constitute security offerings, it did find that the company's sales to institutional buyers did. The SEC is seeking a civil penalty of $876,308,712, which Ripple believes is excessive. The company's lawyers argue that a penalty of $10 million, representing a small percentage of their actual gross revenues, would be more appropriate.

By pointing to the Terraform Labs settlement, Ripple's lawyers aim to show that the SEC's proposed penalty is disproportionate to the company's actions. They emphasize that there were no allegations of fraud and no substantial losses to institutional buyers. The case highlights the ongoing debate between regulatory bodies and cryptocurrency companies, with Ripple seeking a more reasonable penalty for their alleged violations.