Judge Torres Must Decide the Penalty Ripple Has to Pay for Selling Unregistered XRP to Institutional Investors

The penalty will draw investor interest after the SEC pushed for a $2 billion penalty and an injunction.

The SEC's legal battle against Ripple over XRP has reached a critical stage, with Judge Analisa Torres set to determine the penalty for selling unregistered XRP to institutional investors. The decision is highly anticipated by investors, as the SEC has requested a $2 billion penalty and an injunction against XRP sales to institutional investors.

If granted, the injunction could significantly impact Ripple's US expansion plans. Additionally, XRP may face intense selling pressure in the event of an injunction.

Moreover, an injunction could motivate the SEC to appeal the Programmatic Sales of XRP ruling. In July 2023, Judge Torres ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test, rendering XRP not a security in this specific context.

The SEC's Plan to Appeal Programmatic Sales Ruling UnclearRecent court rulings in the SEC's crypto cases have brought the SEC's plans to appeal the Programmatic Sales of XRP ruling into question.

In December 2023, Judge Jed Rakoff ruled that Terraform Labs and Do Kwon violated US securities laws by failing to register TerraUSD and Luna as securities. Prior to the December court ruling, Judge Rakoff notably criticized Judge Torres's Programmatic Sales ruling, stating that Judge Torres erred in concluding that XRP was not a security when sold on exchanges.

This ruling marked a major victory for the SEC, and it was widely anticipated that the SEC would appeal the Programmatic Sales ruling.

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