Ripple has been ordered by a U.S. judge to pay the Securities and Exchange Commission (SEC) $125 million in penalties for improperly selling its XRP token to institutional investors.
Despite the penalty, CEO Brad Garlinghouse has described the ruling as a victory for Ripple, highlighting that the SEC had initially sought $2 billion in penalties. The SEC filed a lawsuit against Ripple, Garlinghouse, and co-founder Christian Larsen in 2020, alleging that they raised over $1.3 billion through an unregistered and ongoing digital asset securities offering.
In a significant ruling last year, U.S. District Judge Analisa Torres determined that Ripple did not violate federal securities law by selling the XRP token on public exchanges and through algorithms. However, she also ruled that the institutional sales of XRP did violate federal securities law, leading to the $125 million penalty.
In a post on X, Garlinghouse stated, “The SEC asked for $2B, and the Court reduced their demand by ~94%, recognizing that they had overplayed their hand. 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.”