Ripple Fined $125 Million in SEC Lawsuit, Avoids $2 Billion Penalty

• Ripple was ordered to pay a $125 million fine to settle the SEC’s lawsuit over XRP sales.
• The court rejected the SEC’s request for Ripple to return profits due to insufficient evidence of investor harm.
• Ripple’s CEO celebrated the reduced penalty as a victory for the company and the crypto industry.

A Manhattan court judge has ordered Ripple Labs to pay the U.S. Securities and Exchange Commission (SEC) $125 million in penalties over charges of improperly selling the cryptocurrency XRP. This judgment follows a long-running legal battle between Ripple and the SEC, marking a significant moment in cryptocurrency.

SEC’s Initial Claims and Ripple’s Response

The SEC initially sought fines and penalties totaling $2 billion, as Ripple’s Chief Legal Officer Stuart Alderoty stated in March. However, the ultimate fine is only worth a few pennies of this sum. In 2020, SEC filed a lawsuit against Ripple, CEO Brad Garlinghouse and co-founder Chris Larsen for raising more than $1.3 billion illegally by selling XRP as an unregistered security.

According to Ripple’s Chief Legal Officer Stuart Alderoty in March, the SEC originally sought $2 billion in fines and penalties. However, only a small portion of that amount became the ultimate penalty. The SEC had sued Ripple, its CEO Brad Garlinghouse and co-founder Chris Larsen for unlawfully raising more than $1.3 billion through XRP sales which were not registered as securities.

Court Ruling and Reactions

The SEC dropped all remaining charges against Garlinghouse and Larsen this past October. According to the recent order by court, Ripple was fined for selling institutional XRP without registering it as security. Nevertheless, the same court has ruled that federal laws on securities were not violated when Ripple sold programmatically to retail clients through exchanges.

Ripple’s CEO Brad Garlinghouse said he respects the decision of the court, adding: “We respect the court’s decision and have clarity to continue growing our company.” For their part an SEC spokesperson again said that regardless of what technology is used one must follow securities laws.

Lower Penalty and Future Implications

The fine is much less than what was initially demanded by SEC since disgorgement and interest were denied by the judge.Analisa Torres ruled that there is no sufficient evidence showing investor harm caused by ripples’ institutional sales which would require returning their profits back according to her judgment.