It was a high-stakes cryptocurrency dispute that could have hobbled Ripple XRP utility token developer Ripple Labs’ ability to continue its operations.
But after four years of legal wrangling with the US Securities and Exchange Commission (SEC), the San Francisco-based blockchain developer has emerged slightly bruised but not battered.
The SEC had been seeking $2 billion in civil fines for what it saw as an unregistered securities offering tied to the XRP crypto token.
Instead, Manhattan Judge Analisa Torres, in a Wednesday ruling, ordered Ripple Labs to pay just $125 million to the SEC, barely 6% of the initial sum sought.
Ripple Lab had already secured a partial victory in July 2023, when Judge Torres ruled that XRP is a security when offered to institutions, but not a security when bought by retail investors.
The SEC abandoned its appeal to this ruling the following October. Ripple Labs’ substantially reduced fine reflected this partial victory.
Commenting on Judge Torres’ ruling, Ripple Labs’ chief legal officer Stuart Alderoty stated on X: “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.
“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.”
Chief executive Brad Garlinghouse called it “a victory for Ripple, the industry and the rule of law”.
“The SEC’s headwinds against the whole of the XRP community are gone,” he added.
The SEC asked for $2B, and the Court reduced their demand by ~94% recognizing that they had overplayed their hand. 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. The SEC’s…
— Brad Garlinghouse (@bgarlinghouse) August 7, 2024
In the past, SEC chair Gary Gensler has been something of a bogeyman for the cryptocurrency industry due to his campaign against what he considers securities law violations.