Ripple Fined $125 Million for Securities Violations by Federal Judge
Ripple has been fined $125 million for violating federal securities laws during institutional sales of XRP, a far cry from the $1 billion originally demanded by the SEC.
The federal judge found that Ripple’s sales of XRP to individuals through exchanges were not in violation.
In addition to the fine, Ripple must file a registration statement for any future securities sales, and the SEC may attempt to appeal the July 2023 decision.
Context and Previous Decisions
This fine stems from a July 2023 ruling by Judge Analisa Torres of the Southern District of New York. Judge Torres concluded that Ripple had violated federal securities laws through direct sales of XRP to institutional customers. However, she also determined that sales of XRP to individuals through exchanges were not in violation of securities laws.
Fine Details and Prohibition of Future Violations
The $125 million fine imposed by Judge Torres is significantly lower than the $1 billion in restitution and pre-judgment interest, as well as the $900 million in civil penalties originally sought by the SEC. This significant reduction in financial penalties shows an adjustment from the SEC’s initial demands.
In addition to the fine, Judge Torres has prohibited Ripple from violating federal securities laws again. She emphasized that there is a reasonable likelihood of future violations, justifying the issuance of an injunction. This injunction requires Ripple to file a registration statement if it plans to sell securities in the future.
SEC’s Attempted Appeal
The SEC unsuccessfully attempted to appeal the part of the decision that exempted sales of XRP to individuals. With the sentence now imposed, the SEC may once again seek to appeal the July 2023 decision. After the judge denied the SEC’s motion for an interlocutory appeal last year, this new phase could see a resumption of appeal attempts.
Following the denial of the interlocutory appeal, the SEC and Ripple settled charges involving CEO Brad Garlinghouse and other executives.
