Ripple Labs claims that the math is not right. A letter was recently submitted by the XRP-token developer in its lawsuit with the Securities and Exchange Commission (SEC).
It cited the recent settlement of Terraform Labs worth $4.5 billion and claimed that its own penalty should also be reduced by $10 million.
The penalty
The SEC had proposed earlier this year that a penalty of $2 billion be imposed on Ripple Labs. This civil penalty would include prejudgment interest of $198 million and disgorgement of $876 million.
Court documents revealed that it would also include an additional civil penalty of $876 million. In its letter, the company behind XRP said that it has new evidence to argue for a lower penalty.
The Terraform Labs case had resulted in losses for investors of more than $40 billion. The case was settled at just over $4 billion.
This includes disgorgement worth $3.6 billion and civil penalties of $420 million. Ripple said that the gross sales of the defendants stood at about $33 billion.
The civil penalty imposed was about 1.27% of this figure. The company also added that the SEC had agreed to civil penalties between 0.6% and 1.8% of the gross revenues of the defendants in other cases.
The argument
Ripple further said that the securities regulator was asking for a penalty far higher than that in its case.
The lawyers said that this was despite no substantial losses for institutional investors, or fraud of any kind.
Chief legal officer at Ripple, Stephen Alderoty, claimed that the SEC had been occupied with getting press in the Terraform Labs case.
He took to X to claim that even though the agency was touting a big penalty, it would actually be just another creditor in bankruptcy court.
He added that rather than developing good policies, the regulator is busy in chasing headlines.
The lawsuit
The SEC and Ripple have been tangled in the lawsuit since 2020 when the former sued the latter. It also sued Brad Garlinghouse, the CEO, and co-founder, Christian Larsen.
The agency had alleged that the XRP token was an unregistered security. At that time, the token had a total market cap of $20.7 billion, making it the third-largest crypto after Bitcoin and Ethereum.
Since then, the XRP token has undergone massive growth. Its market cap has now climbed to a whopping $26 billion.
However, it is no longer in the top three list, as other assets have also surged during this time including both Bitcoin and Ethereum.
As a matter of fact, XRP is now the eighth-largest crypto token in the market. The tokens ahead of it include USDC, Lido Staked Ether, Solana, BNB, and Tether.
The company had been awarded a partial victory in its case with the SEC, rather than a complete one. Therefore, it will have to pay a penalty for its XRP token sales.