Ripple Labs Inc. is now engaged in a legal dispute with the US SEC over a proposed fine of $2 billion. The company is contending that the appropriate penalty should be lower, about $10 million.

The company cites Terraform Labs’ $4.5 billion settlement as a point of reference, contending that the SEC’s penalty encompassed a substantial monetary fine and a prohibition on co-founder Kwon Do-hyung from assuming certain corporate positions.

Ripple contends that their conduct were comparatively less egregious and had a lesser magnitude of damage, hence deeming the proposed $2 billion penalty unjustifiable.

The Ripple case has the potential to establish significant legal standards for the regulation of crypto, as it prompts inquiries into the classification of XRP as a security.

The judge’s preliminary finding in favor of Ripple introduces intricacy, suggesting that the regulatory treatment is contingent upon the context of the sale. If Ripple successfully reduces the charge, it might set a precedent in the cryptocurrency industry.

This could potentially aid other companies facing similar allegations, as it would demonstrate that not all digital asset purchases warrant severe penalties. Ripple’s challenge is essential in determining the future regulatory landscape for digital assets in the United States.