In a significant development in the long-running legal battle between Ripple and the Securities and Exchange Commission (SEC), a federal judge has ordered Ripple to pay a $125 million fine for violating federal securities laws.
The ruling was made by District Judge Analisa Torres of the Southern District of New York, who found that Ripple’s institutional sales of XRP breached securities regulations.
Judge Torres clarified that while Ripple’s institutional sales were in violation, the programmatic sales of XRP to retail clients through exchanges did not contravene federal securities laws. This distinction was pivotal in the case, as it meant that only specific transactions were subject to penalties.
The $125 million fine imposed is considerably lower than the SEC’s initial demands, which included $1 billion in disgorgement and prejudgment interest, along with $900 million in civil penalties. Despite the reduced fine, the ruling represents a significant blow to Ripple, as it highlights the company’s past non-compliance with securities laws.
Moreover, Judge Torres has issued an injunction preventing Ripple from future violations of federal securities laws. This measure aims to ensure that Ripple adheres strictly to legal requirements in its operations moving forward. The judge emphasized that Ripple’s “on demand liquidity” offerings could potentially lead to further violations, indicating a cautious approach towards the company’s future activities.
The injunction mandates that Ripple must file a registration statement if it intends to sell any securities in the future. This requirement is designed to enhance transparency and compliance with regulatory standards.
The SEC is expected to appeal the July 2023 ruling now that the sentence has been imposed. Previously, the SEC’s motion for an interlocutory appeal was denied by the same judge. The ongoing legal tussle has seen the SEC and Ripple settle charges related to CEO Brad Garlinghouse and other executives after the denial of the interlocutory appeal.
In the wake of the judgment, the price of XRP saw a slight increase, rising by approximately 20%. This uptick indicates a positive market response, possibly reflecting investor confidence in Ripple’s future.
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