- The US Securities and Exchange Commission has filed a motion for remedies against Ripple
- The filing follows a three-year legal battle to determine whether XRP is a security
- The Commission requires a total of almost $2 billion in penalties from Ripple
The United States Securities and Exchange Commission has filed its motion for remedies against renowned tech company XRP (Ripple). The filing follows a legal battle that has lasted over three years between the regulator and Ripple over the latter selling XRP in what the SEC described as an “unregistered securities offering.” The highlight of the case so far is Ripple’s partial victory over the SEC, however, the case has yet to come to an end following the SEC’s recent motion for remedies against Ripple.
The SEC Demands $2 Billion as Cumulative Penalty From Ripple
Earlier this month, the court permitted the SEC to file its opening remedies-related brief and supporting materials on Friday, March 22. After the filing, a censored version of the material was released yesterday and presented the highlights of the brief, including the SEC’s proposed civil penalty against Ripple.
In the document, the SEC insists that “Ripple received a billion dollars from its illegal sales of XRP” and should be disgorged of its “illegal profits.” According to the filing, disgorgement is intended to return the defendant (Ripple) to the status quo before its “illegal offering.” In that case, the SEC expects Ripple to shed its “net profits” from the unregistered institutional sales.
The SEC split Ripple’s proposed settlements into three major payments. First, the Commission slams Ripple with a proposed disgorgement of $876,308,712 which the SEC believes is a “reasonable approximation of profits causally connected to the violation.”
Additionally, the regulator proposes a prejudgement interest of $198,150,940 on the disgorgement amount. This prejudgement interest is intended to relieve Ripple of the full measure of its profits from holding the “illicit funds” over time. The SEC claims it applied the IRS yearly underpayment rate to arrive at this figure.
Finally, the SEC proposed a “civil penalty equal to Ripple’s ill-gotten gains.” The SEC demands this significant penalty given the “egregiousness of Ripple’s misconduct.” According to the SEC, a penalty equal to its proposed total disgorgement will serve as a worthy civil penalty for Ripple.
The Commission therefore calculated $876,308,712 to serve punitive and deterrent goals. In total, the disgorgement, prejudgement interest, and civil penalty – if approved – will set back Ripple a walloping $1.95 billion.
Ripple To Further “Expose” The SEC When They Reply To The Brief
Some Ripple executives have expressed their displeasure with the SEC over its demand of approximately $2 billion and other contents of the document. Ripple CEO Brad Garlinghouse reiterated the Judge’s admonishment to the SEC for acting without “faithful allegiance to the law” in the Ripple case while reacting to the SEC’s demands.
“The SEC plans to ask the Judge for $2B in a case that involved no allegations (let alone findings) of fraud or recklessness. There is absolutely no precedent for this. We will continue to expose the SEC for what they are when we respond to this,” said Garlinghouse.
The Chief Legal Officer at Ripple, Stuart Alderoty was also as displeased as his comrades. “Rather than faithfully apply the law, he wrote, the SEC remains bent on wanting to punish and intimidate Ripple – and the industry at large.” Alderoty further adds that they trust the court will “approach the remedies phase fairly.”
Ripple has till April 22 to file an opposition brief which will be made public on April 24 after redactions. After that, the SEC will file a reply brief due on May 6. Ripple has spent over $200 million in its legal battle with the SEC which CEO Garlinghouse has described as a “bully.” The legal battle is almost four years old and is expected to comes to a close this year.