Ripple Ordered to Pay $125 Million Penalty in SEC Lawsuit, Escapes Additional Charges

A pivotal ruling in the legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has culminated in a federal judge mandating Ripple to pay a civil penalty amounting to $125,035,150. This penalty stems from the long-standing lawsuit initiated by the SEC, which had originally pursued a substantial $2 billion remittance. Ripple, on the other hand, had advocated for a maximum penalty of $10 million.

In addition to the monetary penalty, Ripple has been instructed to cease any further breaches of securities laws, according to the court filing by Judge Analisa Torres. The judge dismissed the SEC's plea for disgorgement and prejudgment interest, stating that the SEC had failed to show “pecuniary harm” necessary to justify such measures. This decision comes after the SEC first lodged its complaint against Ripple in December 2020. Notably, Ripple secured a partial triumph through a summary judgment in July 2023. Judge Torres ruled that while Ripple’s institutional sales of XRP did amount to an unregistered securities offering, its programmatic sales did not fall under the same category.

The $125 million penalty was calculated based on Judge Torres’ identification of 1,278 transactions that infringed upon Section 5 of the Securities Act, specifically relating to institutional sales of XRP.

Further complexities in the case persisted, with the court in 2023 mandating a trial to address unresolved issues, including accusations of aiding and abetting securities law violations against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. However, these charges were subsequently dropped by the SEC in October.

This resolution marks a significant development in the protracted legal confrontation between Ripple and the SEC, potentially setting a precedent for future regulatory actions within the cryptocurrency industry.