SEC Requests $1.95 Billion Fine from Ripple

SEC Seeks $1.95 Billion Fine Against Ripple Labs, Including Disgorgement, Civil Penalty, and Interest.

Key Takeaways:

  • On Monday, Ripple execs revealed that the Securities and Exchange Commission (SEC) is seeking to impose a $1.95 billion fine against Ripple Labs.
  • The proposed fine comprises $876 million in disgorgement, a $876 million civil penalty, and $198 million in prejudgment interest, bringing the combined fine to $1.95 billion.

What is Ripple Labs?

Founded in 2012, Ripple Labs is a US-based technology company that developed the Ripple payment protocol.

While Ripple didn't create the XRP token, the company owns a substantial portion of the supply that developers gifted to it. Ripple sometimes sells a portion of its holdings to cover costs, create XRP use cases, and market the product.

The infamous Ripple SEC lawsuit started in 2020 when the SEC claimed that Ripple and two executives raised $1.3 billion in an unregistered securities offering. The lawsuit ran for three years and loomed heavily over XRP.

However, in June 2023, a judge ruled that the XRP tokens Ripple Labs sold did not constitute a security. Upon this news, the price of XRP surged by 92.93% from $0.4721 up to a 14-month high of $0.9107. However, the price of XRP retraced as people ventured to sell XRP, and this movement was mainly wiped out within just over 30 days.

The Ripple Fine

The judge ruled that Ripple's sale of XRP to retail investors on exchanges did not violate US law. However, the judge ruled that Ripple's sale of XRP to institutions violated the law.

After a nearly 10-month wait, the SEC issued its latest blow to Ripple in the form of a $1.95 billion fine. Ripple plans to appeal the fine and has until April 22 to do so.

What Does it Mean for XRP?

Ripple Labs' chief legal officer, Stuart Alderoty, has stated that the company will file its response to the SEC by next month. The SEC mandated that the filing occur no later than April 22, 2024.

At present, XRP is trading around the $0.64 region. Most traders and investors agree that the token must break the $0.72 level to yield a significant increase. However, the suit could reduce the number of people wanting to buy XRP.

It'll be interesting to see how the SEC's fine and Ripple's motion affect the price of XRP. The lawsuit has already dragged on for over three years. Upon the initial ruling, XRP surged by almost 100%. Could the asset enjoy similar growth after the suit finally concludes? Only time will tell.