Judge Fines Ripple $125M, Bans Future Securities Law Violations in Long-Running SEC Case

• A federal judge imposed a $125 million fine on Ripple after finding last year that its institutional sales of XRP violated federal securities laws.

• The judge reiterated her view that Ripple’s programmatic sales of XRP to retail clients through exchanges did not violate federal securities laws.

A federal judge ordered Ripple to pay $125 million in civil penalties and imposed an injunction against future securities law violations on Wednesday.

District Judge Analisa Torres, of the Southern District of New York, imposed the fine after finding that 1,278 institutional sale transactions by Ripple violated securities law, leading to the fine. The $125.035 million fine is well below the $1 billion in disgorgement and prejudgment interest and $900 million in civil penalties the SEC sought.

Wednesday’s order on remedies follows the judge’s July 2023 ruling in the case itself, finding that Ripple violated federal securities laws through its direct sale of XRP to institutional clients, though she also ruled that Ripple’s programmatic sales of XRP to retail clients through exchanges did not violate any securities laws.

The SEC tried unsuccessfully to appeal that portion of the ruling while the case was ongoing.

Judge Torres also banned Ripple from future violations of federal securities laws on Wednesday, saying that while she isn’t making a judgement that Ripple has violated any laws after the SEC filed its lawsuit, the company may well “cross the line” in a section referring to Ripple’s “on demand liquidity” offerings.

“Rather, the Court finds that Ripple’s willingness to push the boundaries of the Order evinces a likelihood that it will eventually (if it has not already) cross the line,” she said. “On balance, the Court finds that there is a reasonable probability of future violations, meriting the issuance of an injunction.”

The injunction document requires Ripple to file a registration statement if it intends to sell any securities.

The SEC is likely to appeal the July 2023 ruling now that the judge has imposed a sentence, after the same judge denied the SEC’s motion for an interlocutory appeal last year.

The SEC and Ripple settled charges tied to CEO Brad Garlinghouse and other executives after that interlocutory appeal was denied.

The price of XRP rose 3 cents, or around 2%, after the judgement was published.