Ripple Throws Support Behind Terraform Labs, Criticizes SEC’s $4.47 Billion Penalty
In a bold move, Ripple has come out in support of Terraform Labs, denouncing the US Securities and Exchange Commission’s (SEC) hefty $4.47 billion settlement fine as unjust. Terraform Labs, on the other hand, argues that their penalty should not exceed $10 million due to financial constraints.
The SEC recently demanded that Terraform and its founder, Do Kwon, pay a staggering $420 million in civil penalties and $3.58 billion in disgorgement. These penalties stem from allegations that Kwon and his previous company misled investors about their bitcoin products, resulting in losses of $40 billion.
Ripple, in its bid to challenge the SEC’s payment proposal, has filed a Notice of Supplemental Authority regarding Terraform Labs’ Consent Judgment. The ongoing case between SEC and Ripple could be concluded at any moment, adding to the anticipation surrounding the outcome.
Ripple points out that while the court found Kwon and Terraform Labs guilty of securities fraud, the proposed payment amounts to around 1.27% of Terraform’s $33 billion gross sale, a figure that Ripple deems unreasonable. The company highlights that most SEC civil penalties typically fall between 0.6% and 1.8%, with more serious offenses attracting a 1.8% penalty. Ripple argues that Terraform Labs should be subject to a similar penalty range and suggests that market experts are critical of the SEC’s harsh stance.
Moreover, Ripple notes that the Terraform Labs case lacks significant institutional investment losses or fraud accusations, further questioning the rationale behind the SEC’s demands.
Terraform Labs, facing financial difficulties as a bankrupt company with $75 million in Assets Under Management (AUM), asserts that it cannot afford the exorbitant penalties and disgorgement fees. Coinbase CLO Paul Grewal has echoed this sentiment, suggesting that $7 million would be a more reasonable amount and raising doubts about the SEC’s settlement demands.
The outcome of this case could set a precedent for other lawsuits related to SEC regulations, including the long-standing dispute involving Ripple. As of the latest data, the price of XRP stands at $0.479, showing a decline of 1.53% in the past 24 hours and 8.16% over the previous 7 days, indicating a bearish trend. Ripple’s CEO has hinted that the SEC case may reach a resolution on September 21, adding further intrigue to the ongoing legal battle.