- Ripple Labs has received a $125 million fine in its securities case against the SEC
- Judge Analisa Torres has ruled that Ripple’s 1,278 institutional sales have violated securities regulations
- The fine has been significantly lower than the SEC’s $1.9 billion demand, which may be appealed
Ripple Labs has been handed a $125 million fine in its long-running securities case against the US Securities and Exchange Commission, representing a win for the company. District Judge Analisa Torres, of the Southern District of New York, levied the penalty following a finding that Ripple’s 1,278 institutional sale transactions violated securities regulations. The fine is substantially lower than the SEC’s demand of $1.9 billion, which the SEC may appeal.
Judge Torres Rejects SEC $2 Billion Demand
The SEC sued Ripple in December 2020, arguing that sales of its XRP tokens constituted an unregistered sale of securities. Ripple fought the case and won a famous victory last July when Judge Torres ruled that “XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract.”
Judge Torres also ruled that institutional sales of XRP tokens were found to constitute a securities contract, leading to the SEC demanding a $2 billion settlement in March. Ripple CEO Brad Garlinghouse told Bloomberg last month that he expected a resolution “very soon,” a prediction that has come true, and in a positive manner for the company.
Reasonable Chance of “Future Violations”
While she refrained from declaring that Ripple has committed any infractions following the SEC’s lawsuit, Judge Torres’ comments suggest a potential risk associated with Ripple’s “on demand liquidity” services, finding 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.” She also noted, “On balance, the Court finds that there is a reasonable probability of future violations, meriting the issuance of an injunction.”
The injunction mandates that Ripple must file a registration statement if it plans to sell any securities in the future.
While Ripple can tick this element of the case off the list, it still has potentially bigger fish to fry: the SEC’s appeal of Judge Torres’ ruling is making its way through the system, which, if overturned, would result in a far bigger penalty.
