In a new turn in the ongoing legal dispute between Ripple and the SEC, the crypto company has invoked the recent TerraForm Labs consent judgment to challenge the regulator's demands.
Thus, the company filed a Notice of Supplemental Authority, drawing parallels between its case and the SEC’s actions against TerraForm Labs, the firm behind the infamous Luna coin.
Tomiwabold OlajideAs became known yesterday, the SEC's case against Terra resulted in a significant settlement approved by the New York District Court. The firm was ordered to pay an epic $4.47 billion fine for orchestrating "one of the largest securities frauds" in U.S. history. Its former CEO, Do Kwon, is also required to reimburse over $204 million.
In total, TerraForm Labs was found guilty of inflating transaction data and manipulating token prices, resulting in the loss of over $40 billion in investor funds.
Ripple's argument
Ripple's legal team is using this recent judgment to argue against the SEC's requested $2 billion penalty for institutional XRP sales. The company contends that the penalty sought by the regulator in its case is disproportionately high compared to penalties in similar or even more severe cases.
Ripple notes that the SEC's $420 million civil penalty against TerraForm Labs represented approximately 1.27% of the firm's $33 billion in gross sales. In contrast, the SEC is seeking a penalty that is significantly higher than this percentage in the "XRP case," despite no allegations of fraud or substantial losses suffered by institutional buyers.
Ripple asserts that the regulator's request is unprecedented and unreasonable, suggesting that an appropriate civil penalty would be no more than $10 million. By highlighting the TerraForm Labs judgment, Ripple aims to demonstrate the inconsistency in the approach to penalties and seeks a more fair resolution.
Godfrey Benjamin
Denys Serhiichuk
Vladislav Sopov
Dan Burgin