In a recent escalation of the ongoing legal conflict between Ripple and the U.S. Securities and Exchange Commission (SEC), the regulatory agency has proposed a substantial financial penalty against the blockchain company. This move highlights the intensity of the dispute centered around the classification of Ripple’s XRP Coin as a security. The SEC has been known to suffer setbacks in similar cases, but this action represents an aggressive stance towards Ripple.
Rising Stakes in SEC vs. Ripple Showdown
Ripple has been entangled in a legal battle with the SEC since late 2020, with various legal arguments such as the Hinman documents and the Howey test playing pivotal roles. While some partial judgments have been made, the core issue remains unresolved, with the SEC now pushing for hefty fines as a deterrent for Ripple’s non-compliance with securities laws.
The SEC’s legal team filed for court approval of penalties totaling $1.95 billion, breaking down into disgorgement, prejudgment interest, and civil penalties. The rationale behind the fines is to reflect the magnitude of unregistered XRP sales conducted by Ripple over several years.
SEC Pressure Tactics Questioned
Despite the SEC’s position that Ripple can comfortably cover the fine, critics like Jeremy Hogan have raised concerns about the potential impact on individual investors, as the company might have to sell a significant amount of XRP to pay the penalty, potentially depressing the coin’s market price. The SEC maintains that the fines are a reflection of Ripple’s ongoing sale of XRP in disregard of previous legal warnings.
In response to the SEC’s aggressive stance, Ripple’s Chief Legal Officer, Stuart Alderoty, has accused the SEC of attempting to punish and intimidate Ripple. The company plans to make a formal response to the proposed penalties in April, as the legal saga between Ripple and the SEC continues to unfold.