The US Securities and Exchange Commission (SEC) has outlined its reasons for advocating a hefty fine of around $2 billion against crypto company Ripple in a court filing dated March 25.

Previously, Ripple's leadership, including CEO Brad Garlinghouse and CLO Stuart Alderoty, had suggested that redacted versions of the court documents would be made public by March 26.

Today, the SEC unveiled its proposal, detailing its request for Ripple Labs to pay $876 million in disgorgement, $198 million in prejudgment interest, and a $876 million civil penalty, totaling $1.95 billion.

Reasons for SEC's $2 billion Fine Proposal

The SEC's substantial fine proposal against Ripple is based on the significant volume of unregistered XRP sales conducted by the company over the past three years. The regulator argues that such measures are essential to deter similar actions within the broader crypto industry.

Furthermore, the Commission, led by Gary Gensler, alleges that Ripple has failed to acknowledge its violations of securities laws. It criticizes Ripple for misinterpreting a prior court ruling on XRP as a full victory and for avoiding responsibility.

The SEC highlights that Ripple has not taken sufficient steps to address its behavior, such as disclosing withheld information to previous institutional investors. Instead, Ripple has reduced transparency regarding its XRP sales while blaming the SEC for its actions.

Additionally, the SEC accuses Ripple of intentionally bypassing the law. It points out that an unnamed law firm had cautioned the crypto company against selling XRP for cash or promoting it as an investment.

As a result, the SEC emphasizes the necessity of a substantial penalty to compel Ripple to rectify its actions by registering securities sales and necessary disclosures or refraining from selling securities altogether.

The SEC adds:

"The SEC urges the Court to consider how easily actors, particularly in the crypto asset space, can engage in similar conduct to Ripple's and to send a clear message that such abuses will not be tolerated."