Ripple vs SEC: Why Did Ripple Agree to a $125M Fine?
Stuart Alderoty, Ripple’s legal chief, confirmed that Ripple will pay a $125 million fine following a court decision on August 8, 2024. This ruling clarified that XRP, Ripple’s cryptocurrency, is not a security, marking a significant win for Ripple and the broader cryptocurrency sector.
Court Ruling and Fine Details
Judge Torres ruled that Ripple’s institutional sales of XRP violated federal securities laws. However, the court rejected the SEC’s $2 billion fine demand, imposing a $125 million civil penalty instead. This decision highlighted the SEC’s failure to prove that XRP is a security.
Ripple will pay the fine using its cash reserves. Alderoty emphasized that Ripple’s conduct was not reckless or fraudulent, and no financial harm came to the involved counterparties.
Ripple’s Stance and Legal Strategy
Ripple, led by Alderoty, fought the SEC not just for itself but for the entire cryptocurrency industry. The court’s decision confirmed that XRP itself is not a security, similar to how a bar of gold is not inherently a security. This clarity is expected to benefit Ripple and the broader digital currency market.
Historical Sales Under Scrutiny
While Ripple won on XRP’s status, the court found that certain XRP sales from 2015 should have been registered under securities laws. These sales, involving sophisticated third parties, were in technical violation of federal regulations.
Ripple respects this aspect of the ruling and acknowledges the fine. Alderoty noted that Ripple did not act with intent to defraud, and no counterparties suffered financial losses.
Looking Ahead
Ripple will pay the fine within 30 days and is ready to move forward. Alderoty is optimistic that the legal battle is concluding, though the SEC has 60 days to decide whether to appeal. Ripple plans to focus on expanding its business and hopes this case will encourage clearer and more consistent cryptocurrency regulations in the U.S.
