US SEC Rejects Ripple's Attempt to Equate Terraform Labs Case in Lawsuit

US SEC Rejects Ripple's Attempt to Equate Terraform Labs Case in Lawsuit

The US Securities and Exchange Commission (SEC) has argued that it is inappropriate for Ripple to compare its lawsuit to the recent case against Terraform Labs, the company behind the collapsed TerraUSD (UST) stablecoin. In a court filing on Tuesday, the SEC said that the two cases are "factually and legally distinct." The SEC pointed out that Terraform Labs had fired all of the executives involved in the UST debacle, deleted all cryptocurrency keys, and agreed to compensate victims. Ripple, on the other hand, has not taken any such actions. The SEC also argued that the penalty amount it is seeking against Ripple ($2 billion) is not excessive. The SEC said that if the penalty calculation standard used in the Terraform Labs case were applied to Ripple, the appropriate penalty would be $126 million—over 10 times the $10 million penalty that Ripple is seeking. Ripple has argued that the SEC's $2 billion penalty demand is unreasonable. The company has cited the Terraform Labs case as evidence that the SEC is willing to settle for much smaller penalties in cryptocurrency cases. The SEC's filing suggests that it is not willing to take a lenient approach with Ripple. The SEC is likely confident that it has a strong case against Ripple and is not willing to settle for anything less than a significant penalty.