Judge rejects XRP: Ripple fined $125M by SEC

Ripple, the cryptocurrency company, faced a setback in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC) as a federal judge denied its proposed settlement. The judge, Analisa Torres, found Ripple’s offer inadequate in light of the extensive violations related to XRP sales, imposing a hefty $125 million civil penalty on the company.

In an attempt to resolve the remaining issues with the SEC, Ripple had proposed a $10 million penalty for alleged institutional sales of XRP that had previously been deemed as violating securities law. However, the SEC argued that this amount was not sufficient to address the seriousness of Ripple’s conduct. As a result, Ripple now faces a significant financial burden, including $102.6 million in civil penalties and $19.4 million in prejudgment interest, totaling $125 million.

This ruling holds implications not only for Ripple but for the broader cryptocurrency regulatory landscape as well. It demonstrates that judges are hesitant to approve light penalties in high-profile crypto cases, putting pressure on companies to adhere to regulatory standards. Additionally, the decision prolongs the uncertainty surrounding XRP’s future, despite Ripple’s previous partial victories in the case.

The SEC’s lawsuit against Ripple, filed in December 2020, accused the company of conducting an unregistered securities offering through the sale of XRP to institutional investors. In a pivotal ruling in July 2023, Judge Torres differentiated between Ripple’s retail and institutional XRP sales, determining that the latter constituted securities. This distinction shaped the subsequent legal proceedings, revealing internal communications within Ripple that indicated awareness of the potential security status of XRP.

For XRP investors and followers of Ripple’s journey, several key points should be noted. While the recent ruling does not impose an immediate trading ban on XRP, it weakens Ripple’s defense narrative. There is a possibility of increased regulatory scrutiny, especially as the SEC escalates enforcement efforts in the crypto space. Despite the anticipated nature of the decision, market reaction may still influence the trajectory of XRP and Ripple moving forward.

As Ripple contemplates its next steps, the company may opt to appeal certain aspects of the ruling or seek a modified penalty to alleviate its financial burden. However, the judgment handed down by Judge Torres underscores the importance of compliance with regulatory frameworks in the cryptocurrency industry, signaling a new chapter in Ripple’s legal saga with the SEC.