XRP News Today: Ripple and SEC End Five-Year Legal Battle Over XRP

Ripple and the United States Securities and Exchange Commission (SEC) have agreed to drop all appeals, concluding a five-year legal battle. This decision marks a significant moment for crypto regulation and signals the end of one of the industry’s most consequential court cases.

Ripple CEO Brad Garlinghouse announced the decision on Friday. This comes shortly after a New York judge blocked the company’s attempts to settle the case for $50 million. Garlinghouse added that the SEC is also expected to drop its appeal, ending the prolonged legal battle. “Ripple is dropping our cross-appeal, and the SEC is expected to drop their appeal, as they’ve previously said. We’re closing this chapter once and for all and focusing on what’s most important – building the Internet of Value. Lock in.”

Judge Analisa Torres had denied a joint motion for an indicative ruling earlier in the week, the second time she dismissed the appeal. According to Stuart Alderoty, Ripple’s chief legal officer, the court could either dismiss its appeal challenging the prior funding on the historic institutional sale of XRP or proceed with the appeal and litigation. “With this, the ball is back in our court. The court gave us two options: dismiss our appeal challenging the finding on historic institutional sales—or press forward with the appeal. Stay tuned. Either way, XRP’s legal status as not a security remains unchanged. In the meantime, it’s business as usual.”

The SEC sued Ripple in 2020, alleging it conducted an unregistered securities offering by selling XRP tokens to investors. In 2023, Judge Torres ruled that while XRP is not a security, Ripple’s direct sales to institutional investors constituted an unregistered securities offering. The decision was lauded as a landmark split decision, securing a major win for the crypto industry in clarifying that the programmatic sales and secondary market trading of the XRP token did not fall under SEC jurisdiction. However, the judge imposed potential financial penalties for Ripple. The SEC hinted it would appeal the ruling on XRP’s non-security status. However, it ultimately decided to drop the appeal. Ripple’s decision to drop the cross-appeal effectively ends the litigation on the institutional sales ruling. The outcome gives XRP legal clarity in the US and finalizes Ripple’s settlement exposure. However, the company is expected to pay a civil penalty related to the institutional sales of the XRP token.

This decision comes after a federal judge rejected a joint motion by both parties to modify the injunction and reduce Ripple's penalty. The legal dispute centered around the classification of Ripple's XRP token sales, with the SEC alleging that these sales constituted an unregistered securities offering. The judge's ruling in July 2023 determined that while Ripple's sales of XRP on public exchanges did not meet the legal definition of a security, its sales to institutional investors should have complied with securities laws. This ruling led to a civil penalty of $125 million imposed on Ripple in August 2024, which was significantly lower than the $2 billion sought by the SEC. Both parties initially appealed the decision but later agreed to settle if the judge set aside her permanent injunction and approved a reduction in the fine to $50 million. However, the judge rejected this proposed settlement, stating that the parties did not have the authority to agree not to be bound by the court's final judgment.

Ripple's CEO, Brad Garlinghouse, had previously indicated that the company was ready to move on from the legal battle, signaling a willingness to close this chapter. The decision to drop the appeals marks a significant turning point in the ongoing regulatory scrutiny of the cryptocurrency industry. The legal battle has been closely watched by industry participants and regulators alike, as it has implications for the broader classification and regulation of digital assets. The end of this legal battle is expected to provide clarity for the cryptocurrency industry, particularly regarding the regulatory treatment of digital tokens. The outcome may influence future regulatory actions and legal interpretations, potentially paving the way for more defined guidelines on the sale and distribution of digital assets. This resolution could also encourage other companies in the cryptocurrency space to seek regulatory compliance, thereby fostering a more stable and predictable environment for innovation and investment.

The agreement to drop the appeals comes at a time when the regulatory landscape for cryptocurrencies is evolving. The U.S. government's stance on digital assets has shifted, with the inauguration of President Donald Trump marking a change in the regulatory approach. This shift has implications for how the SEC and other regulatory bodies will handle future cases involving cryptocurrencies, potentially leading to more nuanced and balanced regulations. In summary, the decision by Ripple and the SEC to drop their appeals marks the end of a lengthy legal battle that has had significant implications for the cryptocurrency industry. The resolution of this case provides a clearer path forward for the regulation of digital assets and may influence future regulatory actions and legal interpretations. The outcome underscores the importance of regulatory compliance and the need for a balanced approach to the oversight of the cryptocurrency industry.