The U.S. Securities and Exchange Commission (SEC) detailed the rationale behind its insistence that crypto firm Ripple be fined about $2 billion in a March 25 court filing.
Ripple executives, including CEO Brad Garlinghouse and CLO Stuart Alderoty, had previously hinted at the SEC’s impending move. They said redacted versions of the court documents would be released to the public by March 26.
Today, the SEC’s proposal was unveiled, outlining a request for Ripple Labs to pay $876 million in disgorgement, $198 million in prejudgment interest, and an $876 million civil penalty. The total amount is $1.95 billion.
Why SEC Wants Ripple to Be Fined $2 Billion
The SEC has proposed a huge fine against Ripple due to its significant volume of unregistered XRP sales over the past three years. According to the regulator, this step is necessary to discourage similar actions in the broader crypto industry.
Furthermore, the Gary Gensler-led committee alleged that Ripple has failed to acknowledge its violations of securities laws. The committee criticized Ripple for misrepresenting a previous court ruling on XRP as a complete victory and continuing to deny responsibility.
The SEC noted that Ripple failed to take adequate steps to correct its conduct, such as providing withheld information to former institutional investors. Instead, Ripple has reduced transparency regarding its XRP sales while blaming the SEC for its actions.
Furthermore, the SEC accused Ripple of deliberately circumventing the law. The regulator pointed out that an unnamed law firm had advised the crypto company against selling XRP for cash or promoting it as an investment.
Consequently, the SEC emphasized the need for a significant penalty to induce Ripple to rectify its actions by registering securities sales and necessary disclosures or by not selling securities at all.
It added:
“The SEC asks the Court to consider how easily actors today, especially in the crypto asset space, could engage in the same type of behavior as that of Ripple and send a strong message that such abuse will not be tolerated. ”
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