The U.S. Securities and Exchange Commission (SEC) is reportedly seeking fines amounting to approximately $2 billion from Ripple Labs for its alleged unlawful sales of the cryptocurrency XRP, as revealed by the firm’s chief legal officer on Monday.

Stuart Alderoty, Ripple’s chief legal officer, disclosed in a series of social media posts that the SEC had submitted a request for the fines to District Judge Analisa Torres in Manhattan. These filings were made in confidential court documents on Monday, and the commission is expected to make them public on Tuesday, albeit with redactions.

Following this news, XRP saw a reduction in most of its intraday gains, with the cryptocurrency last trading up by 1.3% at $0.64079.

If approved, this potential payout could mark one of the largest fines imposed on a cryptocurrency firm. This development follows Torres’ ruling in July, which deemed Ripple Labs’ sales of XRP valued at nearly $730 million to hedge funds and sophisticated investors as illegal sales of unregistered securities.

Ripple intends to challenge this decision in April through an appeal process.

The legal dispute between the SEC and Ripple dates back to 2020, when the regulator filed a lawsuit against CEO Brad Garlinghouse and co-founder Chris Larsen, alleging that the company had raised over $1.3 billion through illegal sales of unregistered securities.

In a separate ruling, Torres stated that Ripple’s sales of XRP on public exchanges did not constitute sales of unregistered securities.

The ongoing case between the SEC and Ripple holds significant importance for the crypto industry, as its final resolution could potentially shape the regulatory landscape for crypto tokens.

The SEC has consistently argued that crypto tokens should be classified as securities and regulated accordingly under securities laws. However, proponents of cryptocurrencies have contended that traditional securities laws are inadequate for addressing digital assets and have advocated for new, dedicated regulations.

Furthermore, some proponents have argued that cryptocurrencies should be classified as digital commodities, suggesting that they fall under the jurisdiction of the Commodity Futures Trading Commission.