THE US Securities and Exchange Commission (SEC) appealed a court decision ordering Ripple Labs to pay a US$125 million civil penalty for improperly selling its XRP token, a fraction of the US$2 billion the regulator sought in a long legal battle with the cryptocurrency company.
Ripple Labs was sued in 2020 by the SEC, which claimed the company broke the law when it raised money by selling the digital token without registering it as a security. The case has been closely watched because of its implications for the SEC’s regulatory power over crypto.
Last year, US district judge Analisa Torres found XRP was covered by securities law only when sold to institutional investors, a ruling hailed as a major victory for the industry. The SEC, led by chair Gary Gensler, has several major cases against crypto exchanges and issuers, accusing them of offering unregistered securities.
Torres in August issued an injunction barring Ripple from committing further violations of securities laws. But she denied the SEC’s bid for Ripple to disgorge profits from its sales. The regulator had sought more than US$876 million in disgorgement and more than US$198 million in interest, along with an US$876 million civil penalty. Ripple argued it should not have to pay more than US$10 million.
“If Gensler and the SEC were rational, they would have moved on from this case long ago,” Ripple chief executive officer Brad Garlinghouse said. “It certainly has not protected investors and instead has damaged the credibility and reputation of the SEC. Somehow, they still have not gotten the message. They lost on everything that matters. Ripple, the crypto industry, and the rule of law have already prevailed.”
The SEC said: “The district court decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities laws”. BLOOMBERG
