In a new ruling, Ripple Labs has been ordered by a federal judge to pay a civil penalty of $125 million. This decision comes after a prolonged legal dispute with the U.S. Securities and Exchange Commission (SEC), which accused Ripple of improperly selling its XRP tokens to institutional investors without registering them as securities.
The SEC’s lawsuit against Ripple Labs, its CEO Brad Garlinghouse, and co-founder Chris Larsen, began four years ago when it alleged that the company had raised over $1.3 billion through an unregistered securities offering by selling XRP. The SEC initially sought nearly $2 billion in penalties, asserting that Ripple’s actions constituted a significant breach of federal securities laws. However, Ripple contested these claims, arguing that XRP should not be classified as a security and therefore should not be subject to the same regulations.
Now, US District Judge Analisa Torres of the Southern District of New York delivered the final ruling. While the SEC had aimed for a much larger penalty, the court settled on a $125 million fine, a fraction of the original amount sought. Judge Torres’ decision also included an injunction against Ripple, prohibiting future violations of federal securities laws. “Rather, 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,” Torres said. “On balance, the Court finds that there is a reasonable probability of future violations, meriting the issuance of an injunction.”
“The SEC’s motion for remedies and the entry of final judgment is GRANTED IN PART and DENIED IN PART. The Court shall enter a final judgment enjoining Ripple from further violations of the securities laws and imposing a civil penalty of $125,035,150,” the filing stated.
Following the court’s decision, major cryptocurrencies experienced a notable rise in prices. XRP, the cryptocurrency associated with Ripple Labs, surged by 25%, reflecting investor optimism. Bitcoin and Ether also saw gains, rising 4.5% and 5% respectively, although these tokens remain below their levels from the previous week. The court’s decision came at a time of heightened volatility in global financial markets. Cryptocurrency prices had been under pressure due to a combination of economic uncertainties and geopolitical tensions.
Despite the substantial fine, the penalty is a victory for Ripple compared to the nearly $2 billion initially sought by the SEC. This lower-than-expected fine might provide a more manageable financial burden for the company. The company had previously argued for a much smaller penalty of around $10 million. Ripple CEO Brad Garlinghouse expressed respect for the court’s decision, calling it a win for the company. “We respect the court’s decision and have clarity to continue growing our company,” Garlinghouse said in a post on X.
