Ripple Labs Ordered to Pay $125 Million in SEC Case, CEO Hails Ruling as Victory
Ripple Labs, the blockchain solutions provider behind the XRP cryptocurrency, has been ordered to pay a $125 million civil penalty in a case brought by the U.S. Securities and Exchange Commission (SEC). The ruling, issued by U.S. District Judge Analisa Torres of the Southern District of New York, marks a significant development in the long-running legal battle between Ripple and the SEC.
The SEC initially sued Ripple in December 2020, alleging that the company had conducted unregistered securities offerings through its sale of XRP tokens. The case has been closely watched due to its potential implications for the broader cryptocurrency industry and the scope of the SEC’s regulatory authority.
Judge Torres found that 1,278 of Ripple’s institutional sale transactions violated federal securities laws, leading to the imposed penalty. However, the $125 million fine is substantially lower than the nearly $2 billion in penalties, disgorgement, and interest sought by the SEC. Ripple had argued that it should not have to pay more than $10 million.
In addition to the monetary penalty, the court granted the SEC’s request for an injunction barring Ripple from conducting unregistered offerings of XRP to institutional investors. However, Judge Torres denied the agency’s bid for Ripple to pay disgorgement of profits from its sales to institutional investors.
Notably, the judge reiterated her previous ruling from July 2023, which found that XRP was covered by securities laws only when sold to sophisticated institutional investors. This aspect of the ruling was seen as a partial victory for Ripple and the broader crypto industry.
Ripple CEO Brad Garlinghouse hailed the court’s decision as “a victory for Ripple, the industry, and the rule of law” in a post on social media platform X. He emphasized that the SEC’s original demand was reduced by approximately 94%, stating, “We respect the Court’s decision and have clarity to continue growing our company.”
The ruling has had an immediate impact on the cryptocurrency market, with the price of XRP rising significantly following the announcement. The token, which is the seventh-largest cryptocurrency by market value, saw gains of up to 25% in the hours after the decision was made public.
While this ruling appears to bring some closure to the case, it is possible that the SEC may appeal the overall decision, particularly the aspects related to programmatic sales of XRP to retail investors through exchanges. The outcome of this case and any potential appeals could have far-reaching implications for how digital assets are regulated in the United States.
