Ripple argues for lower fines than SEC's proposed $2 billion, cites Terraform settlement to make its case

Lawyers for Ripple Labs are looking to leverage fines recently lodged against Terraform in an effort to pay a lower penalty in its case with the U.S. Securities and Exchange Commission.

Ripple, which has been in a lengthy legal battle with the SEC over the last few years, said financial penalties proposed by the agency were unreasonable, in a "notice of supplemental authority," posted on Thursday. The company compared the SEC's proposed $2 billion fine for selling XRP to institutional investors to fines against Terraform Labs. Ripple has argued its fine should be closer to $10 million .

Terraform agreed to pay $4.47 billion in fines on Wednesday and later on Thursday, a judge signed off on the settlement.

"The civil penalty sought by the SEC in Terraform demonstrates the unreasonableness of the civil penalty sought by the SEC in this case," Ripple's lawyers said. "As Ripple’s opposition explained, in comparable (and even in more egregious) cases, the SEC has agreed to civil penalties ranging from 0.6% to 1.8% of the defendant’s gross revenues. Terraform fits that pattern."

Ripple also cited a jury's determination in April that Terraform Labs and its cofounder, Do Kwon, engaged in civil fraud.

"Here, by contrast, the SEC seeks a civil penalty far exceeding that range, even though there are no allegations of fraud in this case and Institutional Buyers did not suffer substantial losses," the lawyers said. "Terraform thus confirms that the Court should reject the SEC’s disproportionate and unprecedented request and that an appropriate civil penalty would be no more than $10 million."

The SEC did not immediately respond to a request for comment.

The SEC and Ripple have been battling in court for years after the SEC accused the firm of raising $1.3 billion through the sale of XRP, which it says is an unregistered security. Last year, Judge Analisa Torres of New York 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.