Ripple’s XRP Surges 5% as SEC Lawsuit Nears Resolution

The US Securities and Exchange Commission (SEC) is reportedly in the final stages of concluding its long-running lawsuit against Ripple, the issuer of the cryptocurrency XRP. This development has sparked a 5% increase in the price of XRP, rising from $2.14 to $2.24 within an hour, and was trading at $2.23 at the time of reporting.

According to journalist Eleanor Terrett, who cited two well-placed sources, the case is nearing resolution, although negotiations over the settlement terms are still ongoing. The primary point of contention in these discussions appears to be Ripple’s efforts to secure more favorable terms regarding an August ruling by District Judge Analisa Torres from the District Court of the Southern District of New York.

Ripple’s legal team has argued that if the SEC, under new leadership, is moving to reset enforcement actions against crypto firms in favor of regulatory clarity, the penalties imposed on the firm should also be reconsidered. Ripple contends that accepting the court ruling would require an implicit admission of wrongdoing, which is complicated by the SEC’s evolving stance on crypto regulation.

Judge Torres ruled that while the sale of XRP to retail was not considered an unregistered securities offering, Ripple’s institutional sales of XRP constituted investment contracts, violating securities laws. This decision imposed a $125 million penalty on the company and included a permanent injunction prohibiting the sale of XRP to institutional investors. Both parties were preparing their appeals before the rumors surfaced.

On March 1, lawyer James Murphy speculated that the SEC would have accepted a settlement to drop appeals and receive the $125 million penalty. However, the outcome would not be favorable for Ripple, especially if the company is considering a future exempt securities offering or an initial public offering.

As of March 4, the SEC halted 11 lawsuits and investigations against crypto firms, including high-profile cases such as Binance, Coinbase, Kraken, and Consensys. These moves align with the legal clarity sought by the new SEC administration, which includes pro-crypto Commissioner Mark Uyeda as acting chair and pro-crypto Commissioner Hester Peirce as head of the Crypto Task Force. The Crypto Task Force is the first crypto-focused effort from the regulator to establish a comprehensive framework for rulemaking, opposing former SEC chair Gary Gensler’s “regulation by enforcement” stance.

This shift in the SEC’s stance suggests a more favorable regulatory environment for crypto firms, which could have significant implications for the future of digital assets. The potential resolution of the Ripple lawsuit and the SEC’s halting of other investigations indicate a move towards greater regulatory clarity and a more collaborative approach with the crypto industry. This could pave the way for more innovative developments and broader adoption of cryptocurrencies in the financial sector.