SEC’s Long-Running Case Against Ripple Officially Over
The protracted legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs has concluded. The two parties have jointly dismissed their appeals to the Second Circuit Court of Appeals, effectively ending a case that began in 2020. This decision follows a 2023 district court ruling that partially sided with both parties. Each entity will bear its own legal costs.
The SEC’s initial lawsuit, filed under former Chair Jay Clayton (now with the U.S. Attorney’s Office for the Southern District of New York), alleged that Ripple violated securities laws by selling XRP, its associated cryptocurrency. The 2023 district court decision found that Ripple’s sales of XRP to institutional investors constituted unregistered securities offerings, leading to penalties. However, the court ruled that sales of XRP on public exchanges did not violate securities laws.
Following the 2023 ruling, both the SEC and Ripple filed appeals. The SEC appealed the portion of the decision favorable to Ripple, while Ripple cross-appealed to challenge the aspects unfavorable to them. However, these appeals were paused earlier this year, and subsequently dropped in June 2024. This decision, announced by Ripple CEO Brad Garlinghouse, leaves in place the penalties imposed by District Judge Analisa Torres in the original 2023 ruling.
These penalties, stemming from the finding that Ripple violated securities laws in its sales to institutional investors, consist of a $125 million fine and a permanent injunction against future securities law violations. Multiple attempts by both parties to renegotiate these penalties were rejected by Judge Torres due to procedural issues.
The dismissal of the appeals coincides with a broader shift in the SEC’s approach to cryptocurrency regulation under the new presidential administration. The agency has withdrawn several cases and investigations into crypto companies in recent months, signaling a potential change in enforcement strategy. The resolution of the Ripple case, marked by a notable increase in XRP’s price following the announcement, concludes a significant chapter in the ongoing legal and regulatory landscape of the cryptocurrency industry.
