(Kitco News) – The saga that is the Securities and Exchange Commission (SEC) v. Ripple Labs could finally be coming to a close as the federal judge overseeing the case has ordered Ripple to pay a $125 million civil penalty and said the firm was “permanently restrained and enjoined” from violating United States securities laws.
According to a filing in the US District Court for the Southern District of New York, the judgment was reached on Wednesday afternoon. It followed competing motions from Ripple and the SEC, with the former arguing that the firm should pay a maximum civil penalty of $10 million while the regulator recommended a fine of $2 billion.
Judge Analisa Torres found Ripple liable for more than $125 million, and the firm is expected to pay the fine within 30 days.
“Based on the Court’s independent analysis of Ripple’s expert report summarizing the relevant contracts [...] the Court finds that 1,278 transactions violated Section 5, resulting in a civil penalty of $125,035,150,” the filing said.
Judge Torres noted that while the XRP sales that came after the SEC’s complaint was filed may not have violated federal law, “there is a reasonable probability of future violations,” saying “The Court finds that Ripple’s willingness to push the boundaries of the Order evinces a likelihood that it will eventually (if it has not already) cross the line.”
Any future securities offerings by Ripple Labs must include a registration statement filed with the SEC that provides all required information, Torres ordered.
Analysts see the ruling as a win-win of sorts, as the SEC can claim it followed through on its duties and secured a $125 million judgment, while Ripple Labs can highlight that the judgment handed down was only a small fraction of what the regulator sought.
“The SEC asked for $2B, and the Court reduced their demand by ~94% recognizing that they had overplayed their hand,” tweeted Ripple CEO Brad Garlinghouse. “We respect the Court’s decision and have clarity to continue growing our company.”
“This is a victory for Ripple, the industry and the rule of law,” he added. “The SEC’s headwinds against the whole of the XRP community are gone.”
“A final judgment. The Court rejects the SEC’s suggestion that Ripple acted recklessly and she reminds the SEC that this case did not involve any allegations of fraud or intentional wrongdoing, and no one suffered any financial harm,” tweeted Stuart Alderoty, chief legal officer at Ripple. “She rejects the SEC’s absurd demand for $2B in fines and penalties. We respect the $125M fine the Court has imposed for certain historic sales to sophisticated third parties.”
The ruling brings the finishing line within sight for the lawsuit originally filed in December 2020, with the SEC alleging that Ripple used XRP as an unregistered security to raise funds.
Market watchers largely view Ripple as the victor in the case due to the relatively small fine compared to what was requested, along with the July 2023 ruling from Judge Torres that the XRP token is not a security.
The Ripple case is over!!
Congratulations to all the $XRP holders who have endured this court case.
A victory not only for XRP holders, but the entire crypto industry! pic.twitter.com/Ap5kkL0mWz— Certified Crypto (@CryptoGlasgow1) August 7, 2024
But Dennis Kelleher, CEO of BetterMarkets, said celebrations and declarations of victory may be premature as the case can now move to the appeals courts.
“For those celebrating the @Ripple case & claiming it's over & a big victory for #crypto, you're wrong: @SECGov now gets to appeal which the district ct judge prohibited them from doing before, likely b/c he knew his baseless ruling would be overruled - that's what's coming,” Kelleher tweeted.
It remains to be seen how things will ultimately shake out, but for now, the crypto community sees the judgment as a victory for the industry as a whole. XRP enjoyed a notable rally following the announcement, spiking 30% from $0.50 to hit a high of $0.6461 in early trading on Thursday.
XRP/USD Chart by TradingView
At the time of writing, XRP trades at $0.6151, an increase of 21.4% on the 24-hour chart.
