Ripple Throws Support Behind Terraform Labs, Denounces SEC’s Excessive $4.47 Billion Penalty
Terraform Labs is pushing back against the SEC, arguing that their proposed penalty of $4.47 billion is far too high given their financial limitations. Ripple Labs Inc. has joined forces with Terraform Labs in challenging the SEC’s settlement fine.
The SEC’s demands for Terraform and its founder, Do Kwon, to pay $420 million in civil penalties and $3.58 billion in disgorgement on June 12 have sparked outrage. These penalties stem from allegations that Kwon and his previous company misled investors about their bitcoin products, resulting in losses of $40 billion.
Ripple has taken a stand against the SEC’s penalty, pointing out that it represents a disproportionate amount of Terraform’s $33 billion in gross sales. The company argues that the SEC’s payment proposal is unreasonable, especially considering that more serious cases have resulted in smaller penalties.
Ripple has filed a notice of supplementary authority to support their argument that Terraform Labs should not be subject to such a hefty penalty. Market analysts also question the SEC’s harsh stance on this case, noting that Terraform Labs has not been implicated in significant institutional investment losses or fraud accusations.
Terraform Labs, facing financial constraints as a bankrupt company with $75 million in Assets Under Management (AUM), insists that the penalty and disgorgement fee should not exceed $10 million. Coinbase CLO Paul Grewal has echoed these concerns, suggesting that the SEC’s demands are excessive and may not be justified.
The outcome of this case could have broader implications for other SEC-related disputes, including the long-standing legal battle involving Ripple. Meanwhile, the price of XRP has experienced a decline, with a bearish trend over the past 7 days according to CoinMarketCap data. Ripple’s CEO has hinted that the SEC case may be nearing its conclusion, offering a glimmer of hope for the embattled company.