Ripple-SEC Case Ends With $125M Fine, XRP Explodes 24%

Ripple has scored another partial victory in its protracted legal brawl with the SEC.

A New York court on Wednesday ordered fintech company Ripple to pay a $125 million fine as part of its multi-year-long litigation with the U.S. Securities and Exchange Commission (SEC).

In July 2023, the SEC filed a motion seeking a $2 billion civil penalty against Ripple for its institutional sales of XRP, which the agency alleged broke federal securities laws.

However, Judge Analisa Torres of the US District Court for the Southern District of New York found that only 1,278 of Ripple's XRP transactions violated securities laws and imposed a fine that was significantly lower than what the SEC had demanded.

The SEC had also sought to ban Ripple from engaging in any further violations of federal securities laws, a move that was intended to preempt any future XRP sales by the company that could potentially run afoul of securities laws.

Judge Torres imposed the ban on future securities law violations, but she clarified that she wasn't making a judgment on whether Ripple violated any laws after the SEC filed its suit.

“The SEC’s motion for remedies and the entry of final judgment is granted in part and denied in part,” said Judge Torres. “The court shall enter a final judgment enjoining Ripple from further violations of the securities laws and imposing a civil penalty of $125,035,150.”

The fine is to be paid by Ripple within 30 days of the entry of the final judgment, either electronically from a bank account or by certified check.

The SEC filed its lawsuit against Ripple in December 2020, alleging that the company and its executives, CEO Brad Garlinghouse and cofounder Chris Larsen, conducted an illegal securities offering by selling XRP tokens to institutional investors from 2013 to 2019, raising over $1.3 billion in the process.

The SEC claimed that XRP is an unregistered security and that Ripple's sales violated the Securities Act of 1933.

Ripple has maintained that XRP is a digital asset and not a security, and the company's legal team argued that the SEC overstepped its authority by declaring XRP a security without following the proper legal procedures.

In her July 2023 ruling, Judge Torres agreed with the SEC that Ripple's direct sales of XRP to institutional customers violated federal securities laws, but she ruled that the company’s programmatic sales of XRP to retail clients through crypto exchanges did not violate any securities laws.

The judge also ruled that the SEC failed to prove that Garlinghouse and Larsen personally participated in XRP sales that violated securities laws.

Following Wednesday's ruling on remedies, Garlinghouse took to X to comment on the verdict, highlighting the massive reduction in the SEC's proposed fine.

“Today's a victory for Ripple, the industry, and the rule of law,” Garlinghouse wrote in an X post on Aug. 7.

“After the SEC went all-out to try and claim that Bill Hinman's speech didn't matter, the court recognized XRP as a virtual currency and not a security,” he added.

“The SEC's headwinds against the whole of the XRP community are gone. We respect the Court's decision and have clarity to continue growing our company.”

Ripple's chief legal head, Stuart Alderoty, also commented on the verdict, indicating that the blockchain firm would “respect” the $125 million fine.

“We appreciate the Court's thoughtful consideration of the SEC's overreach and look forward to continuing to grow and innovate in the U.S.,” Alderoty said.

The verdict has been met with optimism by XRP investors, who believe that the latest court victory could be a catalyst for propelling the token to new all-time high prices, with some predicting that XRP could soon reach new ATH prices above the coveted $3 milestone.

At press time, XRP is trading at $0.6314 per coin, up 23.8% over the past 24 hours. The coin is now trading at a price that is about 81.4% lower than its 2018 all-time high of $3.84.