A recently released "Supplemental Authorization Notice" reveals that Ripple Labs is leveraging the recent settlement between the U.S. Securities and Exchange Commission (SEC) and Terraform Labs to reduce its proposed nearly $2 billion fine to $10 million.

Push to Lower Settlement Amount

The blockchain company argues that the $2 billion fine proposed by the regulator for providing XRP tokens to institutions is unreasonable and should be closer to $10 million.

"The civil penalties sought by the SEC in the Terraform case indicate that the civil penalties sought by the SEC in this case (Ripple) are unreasonable," said Ripple's attorneys. "As explained in Ripple’s opposition, in similar (or even worse) cases, the SEC has agreed to civil penalties ranging from 0.6% to 1.8% of the total revenue. Terraform fits this pattern."

Ripple also noted that the charges against it differ from those against Terraform Labs, which faced civil fraud allegations, whereas Ripple was only accused of distributing unregistered securities.

Ripple's lawyers added, "By contrast, despite the absence of fraud allegations in this case and the lack of significant losses to institutional buyers, the civil penalty sought by the SEC is far beyond this range. Terraform therefore confirms that the court should dismiss the SEC's disproportionate and unprecedented demands, and the appropriate civil penalty should not exceed $10 million."

Lengthy Court Battle

Ripple has been engaged in a protracted legal battle with U.S. regulators.

The SEC first filed a lawsuit against the blockchain company in December 2020, accusing it of illegally selling XRP tokens to retail and institutional investors, raising over $1.3 billion. XRP was allegedly an unregistered security.

The initial regulatory lawsuit named Ripple CEO Brad Garlinghouse and co-founder Chris Larsen, but charges against them were dropped in October last year. In July last year, a federal court in New York ruled that selling XRP on exchanges and through algorithms did not violate any U.S. securities laws; however, sales to institutions did violate U.S. securities laws.

In March last year, the SEC proposed to recover $1.95 billion from the blockchain company and impose civil penalties, which Ripple strongly opposed.

Meanwhile, this Thursday, a U.S. court approved a settlement agreement between the SEC and Terraform Labs and its former CEO Do Kwon, with the settlement amount exceeding $4.47 billion, including recoveries and penalties. Kwon’s extradition from Montenegro remains pending, and he is personally required to pay over $204 million.