The U.S. Securities and Exchange Commission (SEC) is seeking an eye-watering $2 billion penalty against Ripple Labs in the latest salvo of the long-running legal battle over the company’s XRP cryptocurrency. In court documents to be made public Tuesday, the SEC will officially request the New York judge overseeing the case impose the staggering multi-billion dollar fine on the company. The SEC’s recommendation represents a dramatic escalation as the agency clamps down harder on the blockchain payments firm.
Criticism From Ripple Executives
The company executives swiftly pushed back against the SEC’s astronomical proposed penalty. Stuart Alderoty, Ripple’s Chief Legal Officer, accused the SEC of intentionally issuing “false” and “misleading” statements not faithfully enforced by law. He alleged the agency seeks to “punish and intimidate Ripple” and the broader crypto industry at large.
Brad Garlinghouse, CEO of Ripple, echoed the criticism in a searing tweet. He claimed the SEC under Chair Gary Gensler “has repeatedly acted outside the law,” highlighting judges having previously admonished the agency for “gross abuse of power” and lack of “faithful allegiance to the law.” Garlinghouse argued the potential $2 billion penalty has “absolutely no precedent” in a case involving no fraud or recklessness allegations.
Chris Larsen, Ripple’s co-founder and executive chairman, went even further – accusing Gensler’s SEC of becoming “unhinged” and thinking “it’s above the law.” He warned the agency’s aggressive overreach in crypto cases, singling out the company, risked dragging the U.S. behind other leading nations in the key technological frontier.
Ripple Labs, the blockchain company behind the XRP cryptocurrency, has been embroiled in a lengthy legal tussle with the SEC since 2020. The regulatory agency alleges that Ripple’s sale of XRP tokens constituted an unregistered securities offering, violating federal laws. The company has vehemently denied these claims, asserting that XRP should be classified as a virtual currency rather than a security.
Ripple is contesting the SEC’s claim with force. The company is expected to issue a formal response to this possible fine of several billion dollars next month, which will set the stage for an even more fiery exchange and continue into 2024, with much legal fire-fighting going on in between.
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