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A federal court has settled a historic legal battle between Ripple Labs and the Securities and Exchange Commission (SEC) with a $125 million fine for the former.
Final Decision of Federal Court
After a four-year legal battle, the Ripple vs. SEC lawsuit has finally come to an end, with federal judge Annalise Torres slapping the cryptocurrency company with a $125 million fine. In a filing with the Southern District Court of New York on August 7, Judge Annalise Torres ruled that Ripple must pay a fine of $125 million instead of the $2 billion the SEC had demanded. Ripple had 30 days to pay the SEC.
According to court documents, the final verdict is:
“The SEC's motion to enter a final judgment and relief is granted in part and denied in part. The court enters a final judgment enjoining Ripple from further violations of the securities laws and imposes a civil penalty of $125,035,150.”
Injunctions and future violations
Judge Torres also prohibited Ripple from violating U.S. securities laws in the future. While Ripple’s sales following the SEC complaint may not have violated federal law, Judge Torres noted that:
“The court finds that Ripple's willingness to push the boundaries of its mandate demonstrates that it may eventually (if not already) cross those boundaries.”
This injunction reflects concerns about potential future violations by Ripple.
Background and Legal Context
The ruling follows a July 2023 ruling by Judge Torres that ruled that Ripple’s sale of XRP to institutions violated securities laws, but its sale to the public via cryptocurrency exchanges did not. This distinction was instrumental in shaping the final ruling. The SEC originally sought a $2 billion fine, but Ripple argued for a significantly lower amount of around $10 million.
Event Timeline
The four-year-long lawsuit against Ripple began in November 2020, accusing the company of raising $1.3 billion through an unregistered securities sale using XRP tokens. The recent ruling marks a critical juncture in this long-running legal battle. Judge Torres’ decision provides some closure by clarifying the legal status of XRP in certain contexts and establishing Ripple’s financial obligations.
Ripple's Response and Market Impact
Ripple CEO Brad Garlinghouse called the ruling a victory for the company, the cryptocurrency industry, and the rule of law.
Garlinghouse said in a post on social media platform X on August 7:
“We respect the court’s ruling and have clarity to continue growing our company. The SEC’s backlash against the entire XRP community has disappeared.”
Chief Legal Officer Stuart Alderotti also confirmed the company's intent to comply with the $125 million fine.
After the announcement, the price of XRP rose by about 24%, from $0.50 to $0.62. This market reaction highlights how important the court’s decision is to Ripple and its stakeholders.
Disclaimer: This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.
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