Ripple to Drop Cross-Appeal Against SEC, Ending Years-Long Legal Battle With SEC

Ripple Labs has ended its protracted legal battle with the U.S. Securities and Exchange Commission (SEC) by dropping its cross-appeal. This decision follows the rejection by U.S. District Judge Analisa Torres of a proposed settlement that would have reduced Ripple’s civil penalty to $50 million and lifted a permanent injunction against the company.

Judge Torres twice rejected settlement attempts, citing concerns about the removal of the injunction. She argued that the injunction serves as a crucial safeguard against future violations of federal securities laws, a concern that remained despite the proposed settlement. The judge’s stance highlighted a perceived ongoing risk of Ripple’s non-compliance.

Ripple’s decision to withdraw its appeal effectively concludes the case. The company will accept the originally imposed $125 million civil penalty, and the permanent injunction against it will likely remain in place. This signifies Ripple’s acceptance of the court’s findings regarding its past actions.

The SEC initially sued Ripple in 2020, alleging violations of federal securities laws through XRP sales. After a lengthy trial, Judge Torres ruled that XRP sales to retail traders on public exchanges did not constitute securities transactions. However, sales to institutional investors were deemed to violate securities laws.

The case’s resolution marks a significant development in the cryptocurrency industry’s regulatory landscape. While the court’s decision provides clarity regarding certain aspects of XRP sales, it also underscores the ongoing complexities surrounding the legal classification of crypto assets.

Ripple CEO Brad Garlinghouse confirmed the decision on X, stating that the company is moving on to focus on its future goals. The price of XRP experienced a modest increase following the announcement, reflecting the market’s reaction to the conclusion of this high-profile legal dispute. The resolution, though not entirely favorable to Ripple, brings an end to years of uncertainty for the company and the wider cryptocurrency market. It leaves in place the judge’s determination of which XRP sales were violations and which were not, coupled with the permanent injunction, preventing future problematic actions.