Judge Orders Ripple Labs to Pay $125M Civil Penalty, Grants SEC Injunction

A federal judge has ordered Ripple Labs to pay a $125 million civil penalty and said the firm was “permanently restrained and enjoined” from violating United States

The United States Securities and Exchange Commission has failed in its attempt to have a federal judge impose a $2 billion civil penalty on Ripple Labs, with the court instead ordering the firm to pay $125 million.

In August 2023, Judge Analisa Torres of the US District Court for the Southern District of New York ordered Ripple to pay the civil penalty and said the firm was “permanently restrained and enjoined” from violating United States securities laws.

The SEC filed a lawsuit against Ripple in December 2020, alleging that the firm had raised funds through the sale of XRP as an unregistered security. The regulator had sought billions of dollars in penalties from Ripple, arguing that the firm should pay a maximum civil penalty of $2 billion.

However, Judge Torres found that the SEC had not proven its case and that Ripple was only liable for more than $125 million in civil penalties. The court also rejected the SEC's request for an injunction that would have barred Ripple from selling XRP in the future.

“Based on the Court’s independent analysis of Ripple’s expert report summarizing the relevant contracts […] the Court finds that 1,278 transactions violated Section 5, resulting in a civil penalty of $125,035,150,” the filing stated.

Following the ruling, which saw the court reduce the SEC's proposed penalty by 94%, Ripple CEO Brad Garlinghouse suggested in an X post on Aug. 7 that the court's decision was a “victory for Ripple, the industry and the rule of law.”

“We respect the Court’s decision and have clarity to continue growing our company,” Garlinghouse said. “The SEC’s headwinds against the whole XRP community are gone.”

The SEC and Ripple have been locked in a legal battle over XRP for more than two years. The regulator has accused Ripple of using XRP as an unregistered security to raise funds, while the firm has maintained that the token is not a security.

The court's decision on the civil penalty is likely to be a major blow to the SEC, which had been seeking to impose a record-breaking fine on Ripple. The ruling also suggests that the court is not convinced by the SEC's arguments that XRP is a security.

If the SEC decides to appeal the ruling, the case could drag on for several more years. However, the court's decision on the civil penalty is a significant victory for Ripple and could pave the way for the firm to finally resolve its legal troubles with the SEC.

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