Ripple Ordered to Pay $125M Fine, XRP Prices Surge

Ripple Labs Inc. has been ordered to pay $125 million in civil penalties following a legal dispute with the U.S. Securities and Exchange Commission (SEC). The ruling, issued by Judge Analisa Torres, marks a significant reduction from the SEC's original demand of $2 billion. This legal battle, which began in December 2020, centered on the allegation that Ripple’s sale of XRP to institutional investors constituted unregistered securities transactions.

The court found that Ripple's institutional sales of XRP were indeed investment contracts, thereby violating securities laws. However, it ruled that the company’s programmatic sales and other distributions of XRP did not meet the criteria for investment contracts under the Supreme Court’s Howey test. Additionally, the court determined that individual XRP sales by Ripple co-founders Chris Larsen and Brad Garlinghouse did not constitute unregistered securities offerings.

Ripple argued that any civil penalties should not exceed $10 million, but the court's final judgment set the penalty at $125 million. The SEC will hold these funds, along with any interest and income earned, subject to court approval for distribution. The resolution of this case allows Ripple to move forward without the legal uncertainties that have clouded its business operations for the past few years. Following the news, the price of XRP saw a notable increase.