In a recent development, the US Securities and Exchange Commission (SEC) has turned down Ripple's request to lower the penalty from $2 billion to $10 million. Ripple had argued that the SEC's settlement with Terraform Labs, which amounted to $420 million, was a fraction of the company's total sales, and therefore, their penalty should be reduced accordingly. However, the SEC dismissed this comparison, stating that it was like comparing apples and oranges.

The SEC had initially proposed a total penalty of $2 billion against Ripple, comprising a civil penalty of $876 million, pre-judgment interest of $198 million, and disgorgement of $876.3 million. The dispute between the two parties dates back to 2020, when the SEC alleged that Ripple had sold unregistered securities. In July 2023, a court ruling acknowledged Ripple's violations but limited them to sales involving institutional investors.

The SEC has maintained that Ripple's penalty should be calculated based on the gross profit of the violative conduct, which amounts to over $3.5 billion, representing nearly 12% of the total. Using this calculation, the SEC estimates that Ripple's civil penalty would amount to $102.6 million, which is significantly lower than the proposed $876 million. However, the SEC believes that this reduced penalty would not serve the purpose of the civil penalty statutes.

Ripple's Chief Legal Officer, Stuart Alderoty, has expressed his disappointment with the SEC's stance, stating that the regulator is being unreasonable and that Ripple is thriving despite the legal battle. The case is ongoing, with no clear resolution in sight.

In conclusion, the SEC's rejection of Ripple's plea for a reduced penalty has escalated the legal battle between the two parties. While Ripple argues that the penalty is excessive, the SEC is adamant that it is necessary to serve as a deterrent for future violations. The outcome of this case will have significant implications for the cryptocurrency industry as a whole.