Ripple Corporation's Long-Standing Legal Battle with the Securities and Exchange Commission Concludes Following Four Years
In a landmark decision, the Securities and Exchange Commission (SEC) and Ripple have agreed to dismiss their appeals in the four-year-long XRP lawsuit. The resolution comes with a $125 million settlement paid by Ripple to the SEC, a significant reduction from the initial $2 billion sought by the regulatory body.
The joint stipulation of dismissal was filed with the US Court of Appeals for the Second Circuit, bringing an end to the legal wrangling that has significantly impacted the cryptocurrency industry. The decision does not, however, indicate a ruling on whether XRP is a security or not.
The settlement represents a significant regulatory precedent for the crypto industry. Ripple is now required to register XRP sales to institutional investors going forward or refrain from such sales, reflecting regulatory compliance requirements. The agreement avoids a broader ruling that XRP is a security, upholding the prior decision limiting that designation to institutional sales only.
The legal dispute began in December 2020 when the SEC filed a lawsuit against Ripple Labs and its top executives, accusing them of conducting unregistered securities offerings through the sale of XRP. This lawsuit has seen numerous developments, with a crucial ruling by Judge Analisa Torres of the Southern District of New York in July 2023. The judge determined that XRP sales on public exchanges did not qualify as securities transactions, a partial victory for Ripple.
However, the court allowed the case to continue on other grounds, particularly concerning institutional sales of XRP. The resolution of this lawsuit marks a significant event in the history of the crypto sector, providing clarity, albeit partial, on the regulatory status of XRP.
Stuart Alderoty, Ripple's Chief Legal Officer, expressed his thoughts on the conclusion of the legal battle. He stated, "The end... and now back to business." Alderoty highlighted the Commission's vote to dismiss the appeals. Each party will bear its own legal costs and fees as a result of this resolution. The conclusion awaits formal approval from the Court of Appeals before the litigation is fully closed.
This settlement resolves the four-year legal battle without definitively labeling XRP as a security in all circumstances, providing a significant regulatory precedent for the crypto industry. The cryptocurrency industry, which has been significantly impacted by this four-year legal dispute, can now return its focus to innovation and growth.
[1] CoinDesk. (2023). Ripple and SEC Dismiss XRP Lawsuit, Ending Four-Year Legal Battle. [online] Available at: https://www.coindesk.com/business/2023/07/21/ripple-and-sec-dismiss-xrp-lawsuit-ending-four-year-legal-battle/
[3] The Block. (2023). Ripple and SEC Agree to Dismiss XRP Lawsuit, Settle for $125 Million. [online] Available at: https://www.theblockcrypto.com/linked/114400/ripple-and-sec-agree-to-dismiss-xrp-lawsuit-settle-for-125-million
[4] Reuters. (2023). Ripple to Pay SEC $125 Million to Settle XRP Lawsuit. [online] Available at: https://www.reuters.com/business/finance/ripple-to-pay-sec-125-million-settle-xrp-lawsuit-2023-07-21/
[5] CNBC. (2023). Ripple Settles with SEC Over XRP, Agrees to Pay $125 Million. [online] Available at: https://www.cnbc.com/2023/07/21/ripple-settles-with-sec-over-xrp-agrees-to-pay-125-million.html
- The court-ordered dismissal of the XRP lawsuit between the Securities and Exchange Commission (SEC) and Ripple marks a crucial turning point for the cryptocurrency industry, as the settlement establishes significant regulatory precedent for the crypto business and technology sector.
- The historic settlement between Ripple and the SEC has paved the way for the cryptocurrency industry to reallocate its focus towards innovation and growth, but Ripple must now comply with regulatory requirements, such as registering XRP sales to institutional investors or abstaining from such sales.
