The legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has concluded. The company decided to drop its appeal and agreed to a settlement with the SEC.
Final Settlement with the SEC
As part of the settlement, Ripple will pay $50 million out of the original $125 million fine imposed by the SEC. The remaining $75 million will be refunded to the company. The SEC will also request the court to lift a previous injunction on Ripple, though final legal formalities are still pending. Ripple's Chief Legal Officer, Stuart Alderoty, emphasized that the settlement does not imply any admission of wrongdoing by the company.
Chronicle of the Legal Battle
The SEC originally sued Ripple in December 2020, accusing the company of conducting an unregistered securities offering through the sale of XRP. The main issue in the case was whether digital assets like XRP should be classified as securities. In July 2023, Judge Analisa Torres ruled that sales of XRP to retail investors through exchanges did not constitute securities transactions, but sales to institutional investors totaling $728 million did violate securities laws.
Why the SEC Backed Down?
The SEC's decision to drop its appeal signals a shift in its enforcement strategy. Since Gary Gensler resigned as SEC Chair in January, the agency has reversed several enforcement actions against crypto firms. Ripple CEO Brad Garlinghouse had hinted that the SEC was likely to end its appeal. The resolution of this case could influence regulators' approach to other cryptocurrencies in the future.
The Ripple vs. SEC lawsuit has been a significant chapter in crypto regulation history. Its conclusion may serve as a push towards establishing clearer guidelines for digital assets in the US.
