US SEC appeals $125 million ruling in Ripple Labs XRP case

The US Securities and Exchange Commission appealed a court ruling that directed Ripple Labs Inc. to pay a $125 million civil penalty for allegedly illegally selling its XRP token, a fraction of the $2 billion the regulator pursued in a long legal battle with the cryptocurrency firm, according to a report by Bloomberg.

Ripple Labs was charged by the SEC way back in 2020 for allegedly breaching the legal provision by raising funds by selling the digital token without prior registering as a security. Being followed up so closely is not just because of its implications on the case but because of what their implications may hold for the regulatory authority that the SEC wields over crypto.

This past year, US District Judge Analisa Torres found XRP was only subject to securities law when sold to institutional investors - this ruling was quite a big win for the industry. The SEC, led by chair Gary Gensler, has massive cases pending against crypto exchanges and issuers for offering unregistered securities.

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In August, Torres issued an injunction that bars Ripple from committing future securities law infractions. But she denied the SEC’s bid for Ripple to disgorge profits from its sales. The regulator had requested over $876 million in disgorgement and more than $198 million in interest, along with an $876 million civil penalty. Ripple maintained it should not have to pay more than $10 million.

“If Gensler and the SEC were rational, they would have moved on from this case long ago,” Ripple Chief Executive Officer Brad Garlinghouse said in a post on X.com. “It certainly hasn’t protected investors and instead has damaged the credibility and reputation of the SEC. Somehow, they still haven’t gotten the message: they lost everything that matters. Ripple, the crypto industry, and the rule of law have already prevailed.”

The SEC, in a statement, said, “The district court decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities laws.”