A recent document from the United States Securities and Exchange Commission (SEC) outlines hefty fines and penalties for blockchain company Ripple, presenting a contrasting view to the company's own statements. The SEC's filing on March 25 in the U.S. District Court for the Southern District of New York suggests that Ripple should pay a total of approximately $1.95 billion, including $876,308,712 in disgorgement, $198,150,940 in prejudgment interest, and a $876,308,712 civil penalty. These penalties are deemed fitting by the SEC due to Ripple's alleged disregard for legal warnings and its continued sale of XRP.

According to the SEC, Ripple is in a strong financial position to meet the substantial civil penalty imposed. The SEC justifies the penalty not merely as a cost of doing business for violating securities laws, as per the Second Circuit's stance, but also as a necessary deterrent given Ripple's significant unregistered XRP sales over the past three years. The regulatory body emphasizes the importance of imposing penalties that go beyond being a mere financial inconvenience for companies found in violation of securities laws.

The details in the filing align with earlier statements made by Ripple's Chief Legal Officer, Stuart Alderoty, who had anticipated the announcement of fines and penalties totaling around $2 billion. Alderoty accused the SEC of aiming to penalize and intimidate Ripple, announcing the company's intention to respond to the proposed judgment in April. The SEC's lawsuit, filed in December 2020 against Ripple, CEO Brad Garlinghouse, and co-founder Chris Larsen, alleged that the company had unlawfully raised $1.3 billion through the sale of unregistered XRP tokens. The legal proceedings gained attention in the cryptocurrency sphere following a ruling by Judge Analisa Torres in July 2023, which determined that XRP did not qualify as a security in the context of sales on digital asset exchanges.

What is the SEC's lawsuit against Ripple about

The SEC's lawsuit against Ripple revolves around allegations that Ripple, along with its executives, conducted an unregistered securities offering by selling digital assets known as XRP. The lawsuit, filed in December 2020, claimed that Ripple raised over $1.3 billion through the sale of XRP tokens without proper registration with the SEC.

This legal action led to significant repercussions for Ripple, including delisting or trading suspensions of XRP on U.S. exchanges. The case gained attention when a federal judge ruled that while Ripple did violate federal securities laws by selling XRP directly to institutional investors, it did not breach the law when selling XRP to retail investors through exchanges.

The SEC's pursuit of penalties and fines against Ripple is part of its efforts to enforce securities regulations and ensure compliance within the cryptocurrency space.