SEC argues $2 billion penalty against Ripple is needed, slams $10 million counterproposal

The Securities and Exchange Commission is pushing back against Ripple's claim that it should pay fewer fines, according to a recent court filing.

The SEC has said Ripple should pay close to $2 billion in fines for selling XRP -2.37% to institutional investors. In its opposition motion filed last month, Ripple argued that the figure should be closer to $10 million. The SEC noted its proposed penalty was large but said Ripple's proposed penalty would be a "slap on the wrist" in a filing posted on Tuesday.

"To the contrary, it would encourage other crypto asset issuers to violate Section 5 by making it a remarkably lucrative endeavor, and thus deprive investors the disclosures Congress mandates, as a mere 'cost of doing business,'" the SEC's lawyers said.

The SEC and Ripple have been battling in court for years after the SEC accused the firm of raising $1.3 billion through the sale of XRP, which it says is an unregistered security. Last year, Judge Analisa Torres of New York ruled that some of Ripple’s sales, called programmatic, of XRP did not violate securities laws because of a blind bid process in place for them. She did, however, rule that other direct sales of the token to institutional investors were securities.

The SEC said Ripple had made billions of dollars in institutional sales of XRP. Ripple said it has changed the way it sells XRP after the New York ruling.

Fishing licenses

The SEC also criticized Ripple's assurances to the court that it would not again violate the law in the future.

"Ripple also assures the Court it need not be worried about whether Ripple could again violate the U.S. securities laws by pointing to different licenses it has obtained from different jurisdictions, including those Ripple explains 'do not treat XRP sales as sales of securities,'" the SEC's lawyers wrote on Tuesday. "This argument—akin to saying a New York restaurant need not obtain a liquor license because it obtained a fishing license in California—is absurd."

Ripple Chief Legal Office Stuart Alderoty pushed back on the SEC's statement in a post on X Tuesday evening.

"And just when you think the SEC can’t sink any lower, if you are a financial regulator outside the U.S. and have done the hard work of establishing comprehensive crypto licensing frameworks, know that the SEC has no respect for you and thinks you are handing out the equivalent of fishing licenses," Alderoty said.