In a landmark decision, the United States Securities and Exchange Commission (SEC) has rejected Ripple's bid to reduce a proposed $2 billion fine, citing significant differences between Ripple's case and that of Terraform Labs. The SEC maintains that Ripple's comparison is flawed and ignores gross profit, a crucial factor in determining appropriate penalties.

Ripple had argued that the SEC's demand for a $2 billion penalty is excessive, given that Terraform Labs was fined only 1.27% of its sales despite causing losses of over $40 billion. However, the SEC countered that Terraform Labs is bankrupt and has agreed to severe penalties, unlike Ripple. The regulator highlighted several key differences between the two cases, including Terraform Labs' shutdown of operations, destruction of crypto asset securities, and restitution to investors.

The SEC emphasized that wealthy defendants like Ripple, who fail to acknowledge their violations, should face higher penalties. Ripple's comparison based on penalty ratios is flawed, as it disregards gross profit. The SEC argued that applying Terraform's penalty ratio to Ripple's $876.3 million in gross profits would result in a $102.6 million penalty, far exceeding Ripple's proposed $10 million.

Ripple has been embroiled in a legal battle with the SEC since 2020, accused of using XRP as an unregistered security to raise funds. While Judge Analisa Torres ruled that XRP is not a security in exchange programmatic sales, it is considered a security in direct sales to institutional investors. The SEC and Ripple have been disputing the appropriate penalties ever since.

The SEC's decision underscores the complexities in determining penalties in high-profile cryptocurrency cases. This ongoing legal battle has significant implications for Ripple and the broader cryptocurrency market, highlighting the need for clarity in regulatory frameworks. As the market continues to evolve, the SEC's stance on penalties for unregistered securities sales will be closely watched by investors and industry experts alike.