Ripple Fined $125 Million, SEC Full Demand Denied by Court

Ripple fined $125 million in litigation with the SEC, significantly less than the SEC proposed $2 billion. The court granted partial judgment and imposed an injunction against future securities violations.

Ripple has been fined $125 million as part of its years-long litigation with the U.S. Securities and Exchange Commission, according to a court filing.

“The SEC’s motion for remedies and the entry of final judgment is granted in part and denied in part,” said the filing signed by Judge Analisa Torres of New York. “The Court shall enter a final judgment enjoining Ripple from further violations of the securities laws and imposing a civil penalty of $125,035,150.”

In July, Ripple CEO Brad Garlinghouse said he expected a resolution of outstanding legal issues “very soon.”

In 2020, the SEC accused Ripple of raising $1.3 billion through the sale of XRP, which it says is an unregistered security. Over a year ago, Judge Torres ruled that some of Ripple’s sales, called programmatic, of XRP did not violate securities laws because of a blind bid process in place for them. She did, however, rule that other direct sales of the token to institutional investors were securities.

Ripple’s fine is lower than the SEC’s proposed $2 billion. Ripple had argued it should be closer to $10 million. The SEC had noted its proposed penalty was large but said Ripple’s proposed penalty would be a “slap on the wrist” in a filing posted in May.

Judge Torres also ordered Ripple on Wednesday to stop violating securities laws in the future.

“To be clear, the Court does not today hold that Ripple’s post-Complaint sales have violated Section 5,” Torres said. However, “Ripple’s willingness” to push boundaries shows that they will eventually, if not already, cross that boundary.

“On balance, the Court finds that there is a reasonable probability of future violations, meriting the issuance of an injunction,” Torres said.

In October, the SEC moved to dismiss its lawsuit against Garlinghouse and co-founder Chris Larsen over whether they are liable for their involvement in illegal securities sales.

“The SEC asked for $2B, and the Court reduced their demand by ~94% recognizing that they had overplayed their hand,” said Ripple’s Garlinghouse in a post on X on Wednesday. “We respect the Court’s decision and have clarity to continue growing our company. This is a victory for Ripple, the industry and the rule of law. The SEC’s headwinds against the whole of the XRP community are gone.”

An SEC spokesperson pointed to the court’s decision to grant the agency’s motions, including the injunction blocking Ripple from breaking securities laws and added that fines were much more than what Ripple had proposed.

“The Court also addressed ‘the egregiousness of Ripple’s conduct’ and noted that ‘there is no question that the recurrent, highly lucrative violation of Section 5 is a serious offense,’” the spokesperson said in an emailed statement to The Block. “As court after court has stated, the securities laws apply when firms offer and sell investment contracts, regardless of the technology or labels that they use.”

Updated: Aug. 7 at 8:45 UTC time to include details throughout.

Updated: Aug. 7 at 9:20 UTC time to include a post from Garlinghouse.

Updated: Aug. 7 at 10:00 p.m. UTC time to include comments from the SEC.

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