The U.S. Securities and Exchange Commission (SEC) is reportedly pursuing fines amounting to approximately $2 billion from Ripple Labs for what it alleges to be unlawful sales of the cryptocurrency XRP, as stated by the firm’s chief legal officer on Monday.
In a series of social media posts, Stuart Alderoty, Ripple’s chief legal officer, disclosed that the SEC had submitted confidential court documents to District Judge Analisa Torres in Manhattan on Monday, seeking the specified fines. These documents are scheduled to be filed publicly on Tuesday, albeit with redactions.
Following this revelation, XRP experienced a notable reduction in its intraday gains, ultimately trading up 1.3% at $0.64079.
If approved, this payout could mark one of the largest fines imposed on a cryptocurrency firm. This development follows Judge Torres’s ruling in July, which deemed Ripple Labs’ sales of XRP, amounting to nearly $730 million to hedge funds and sophisticated investors, as unlawful sales of unregistered securities.
Ripple intends to challenge this ruling with an appeal slated for April.
The legal dispute between the SEC and Ripple has been ongoing since 2020 when the regulator filed a lawsuit against CEO Brad Garlinghouse and co-founder Chris Larsen, alleging that they unlawfully raised over $1.3 billion through the sale of unregistered securities.
While Judge Torres ruled that Ripple’s sales of XRP on public exchanges did not constitute sales of unregistered securities, the case remains a focal point for the cryptocurrency industry, with potential implications for the classification and regulation of crypto tokens.
The broader industry’s attention is drawn to the SEC’s assertion that crypto tokens are securities, while proponents argue that existing securities laws are ill-suited for regulating digital assets and advocate for new regulatory frameworks. Additionally, some proponents contend that cryptocurrencies should be classified as digital commodities and regulated by the Commodity Futures Trading Commission.