Ripple to Pay $125 Million Fine for Unregistered XRP Sales

A New York court on Wednesday ordered fintech company Ripple to pay a $125 million fine in its lawsuit with the Securities and Exchange Commission (SEC).

But the civil penalty is significantly less than the $2 billion sought by the SEC in the long-running feud between the crypto giant and the Wall Street watchdog.

U.S. District Judge Analisa Torres ordered the fine, ruling that 1,278 transactions broke securities laws, according to court documents filed today. 

The ruling comes after the SEC sued Ripple back in 2020, alleging that the company sold unregistered securities in the form of XRP. 

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Ripple—whose founders were behind XRP—has been locked in a legal battle with the SEC for years. But last year, Ripple scored a partial court win against the SEC when a judge ruled that programmatic sales of XRP to retail investors did not qualify as securities.

Though the judge also said that $728 million worth of contracts for institutional sales did constitute unregistered securities sales, the ruling sent shockwaves through the industry. 

The regulator faced ongoing criticism from politicians and the crypto industry for cracking down unfairly on the digital asset industry, and the ruling was seen as a success story for the digital asset ecosystem. 

SEC Wants More Than Just a 'Slap On the Wrist' Against Ripple

The U.S. Securities and Exchange Commission says that the penalty that Ripple is willing to pay after a long drawn out legal battle would be a “slap on the wrist that neither punishes nor deters” wrongdoing. The regulator argued in a Tuesday filing that its initial $2 billion demand would be more appropriate than the nearly $10 million fine Ripple proposed last month.  The SEC said that Ripple’s offer would not deter other cryptocurrency businesses from violating Section 5 of the Securities Act,...

Investors have also interpreted today’s ruling as a win for the crypto industry as the fine is significantly smaller than what the SEC had sought.

As a result, the price of XRP shot up by over 18% after the news dropped. It is currently the only major cryptocurrency up today, having risen 16% in 24 hours, and trading hands for $0.60. 

“There is no question that the recurrent, highly lucrative violation of [SEC rules] is a serious offense,” wrote Torres. “However, this case does not involve allegations of fraud, misappropriation, or other more culpable conduct.”

Torres also said that “the SEC has not established that Ripple’s failure to register the institutional sales caused substantial losses (or the risk thereof) to investors.”

Ripple CEO Brad Garlinghouse wrote on Twitter/X that the outcome was “a victory for Ripple, the industry and the rule of law.”

“The SEC’s headwinds against the whole of the XRP community are gone,” he said.