Ripple Labs recently transferred 200 million XRP tokens, valued at approximately $117.61 million. This transaction has sparked rumors that the move could be tied to the company’s looming $125 million penalty payment to the U.S. Securities and Exchange Commission (SEC).
Is Ripple Preparing For The $125M SEC Fine?
The $125 million penalty was imposed after the SEC charged Ripple with selling unregistered securities in violation of Section 5 of the Securities Act. On August 7, 2024, Ripple was fined $125 million for the sale of XRP tokens to institutional investors, part of a larger lawsuit that has been ongoing since December 2020.
The ruling was delivered by Judge Analisa Torres in the Southern District of New York, who found Ripple’s sales in violation of federal law. Ripple was initially facing a potential $2 billion fine, but the final penalty is much smaller, a fact that CEO Brad Garlinghouse and his team have framed as a partial victory for the company.
“We respect the Court’s decision and have clarity to continue growing our company,” Garlinghouse said following the court’s ruling. He added that the firm will pay the fine from its reserves without impacting the company’s operations. Also, according to Bithomp, the firm only has 275.99 XRP left on the concerned account after the latest shift, showing the severity of the movement. Hence, the recent XRP transfer hints toward the penalty settlement.
🚨 🚨 🚨 🚨 🚨 200,000,000 #XRP (117,619,123 USD) transferred from #Ripple to unknown wallet
— Whale Alert (@whale_alert) September 23, 2024
The legal battle between Ripple and the SEC has drawn considerable attention since it began, with the former maintaining that XRP should not be considered a security. However, the court ultimately sided with the SEC on the issue of institutional sales, concluding that Ripple should have registered those sales as securities offerings. In total, the SEC cited 1,278 transactions as violating federal securities laws.
Although Ripple lost on this front, the company scored several significant legal victories throughout the case. Notably, the court ruled that programmatic sales of XRP on public exchanges did not violate securities laws, a decision that the blockchain firm views as critical to its future operations. As a result, the company continues to advocate for clearer regulations in the cryptocurrency space, accusing the SEC of regulatory overreach.
SEC Appeal Probability
However, tensions remain high, especially as the deadline for an appeal from the SEC approaches. Former SEC attorneys Marc Fagel and James Farrell have stated that they believe an appeal is likely. In post on X, Fagel said, “Anything less than an appeal will be bad for the government agency.”
The SEC has two weeks left to file an appeal, and XRP supporters are anxiously waiting for the agency’s decision. Attorney Fred Rispoli added that the SEC appears uncertain about whether it will appeal, suggesting any announcement might come close to the deadline.
Meanwhile, Ripple has secured a stay order from the court, allowing it to hold off on paying the $125 million penalty until the SEC’s decision on an appeal is clear. The firm’s legal team, including Chief Legal Officer Stuart Alderoty, has been vocal about their confidence in the ruling, with him and Garlinghouse both stating that Ripple has no intention of appealing the court’s decision.
