In a recent dispute over penalties, the US Securities and Exchange Commission (SEC) has strongly opposed Ripple Labs' request for a relatively minor financial penalty. Ripple sought a limit of $10 million, a significant reduction from the SEC's initial proposal of $876.3 million.

Ripple justified its request by citing a previous SEC settlement with Terraform Labs. However, the SEC countered that this comparison was invalid because Terraform had agreed to reimburse investors and implement significant leadership changes — actions Ripple has not proposed.

The SEC also contested Ripple's basis for comparison, arguing that while Ripple compared penalties based on gross sales, the SEC insisted on calculating penalties based on the "gross profit of the violative conduct". For Terraform, the SEC's penalty represented nearly 12% of its more than $3.5 billion profit from regulatory violations.

In correspondence with Ripple's legal team, the SEC suggested that applying the same 12% ratio to Ripple's alleged profits of $876.3 million would result in a civil penalty of approximately $102.6 million, which the SEC deemed necessary to meet the objectives of civil penalty laws.

The SEC's proposed penalties for Ripple total nearly $2 billion, including a $876.3 million civil penalty, $876.3 million in disgorgements, and $198.2 million in prejudgment interest. Ripple and the SEC have been engaged in legal disputes since 2020, stemming from the SEC's allegation that Ripple sold unregistered securities, although both parties agree these sales were made exclusively to institutional investors.