Ripple Labs might be subjected to a staggering $1.95 billion fine, as proposed by the US Securities and Exchange Commission (SEC).
The SEC has accused the blockchain company of violating federal securities laws by selling XRP to both institutional and broad-based retail customers.
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In July, New York Judge Analisa Torres found that Ripple's programmatic sales on digital asset trading platforms did not breach US laws, pinpointing only the company's institutional sales as problematic.
The breakdown of the SEC's requested fine includes $876 million in disgorgement, $198 million in prejudgment interest, and a civil penalty of $876 million.
The SEC's filings imply an intent to make an example out of Ripple, stressing the need to "send a strong message" that similar actions in the crypto industry will not be tolerated.
Stuart Alderoty, Ripple Labs' Chief Legal Officer, took to social media to disclose the SEC's fine request and added:
Rather than faithfully apply the law, the SEC remains bent on wanting to punish and intimidate Ripple - and the industry at large.
Ripple's CEO Brad Garlinghouse also commented on the situation, saying that the proposed fine lacks precedent, as the case involved no allegations or findings of fraud. He emphasized the company's commitment to exposing the SEC in its upcoming response, which will be filed in April.
This lawsuit is more than just a legal battle over financial penalties; it's a case that could shape the future regulatory landscape for the crypto industry. As Ripple Labs gears up to counter the SEC's demands, the outcome of this case is poised to potentially redefine compliance standards.
In other news, the SEC has recently initiated an investigation into the Ethereum Foundation, aiming to determine whether Ether should be classified as a security.
