Ripple,SEC Pause Appeal Amid Settlement Talks

An appellate court has granted a joint request from Ripple Labs and the Securities and Exchange Commission (SEC) to pause an appeal in a 2020 SEC case against Ripple amid settlement negotiations. The court approved a joint SEC-Ripple motion to hold the appeal in abeyance — temporarily pausing the case — for 60 days. As part of the order, the SEC is expected to file a status report by June 15.

The SEC’s case against Ripple and its executives, filed in December 2020, was expected to begin winding down after Ripple CEO Brad Garlinghouse announced on March 19 that the commission would be dropping its appeal against the blockchain firm. A federal court found Ripple liable for $125 million in an August ruling, resulting in both the SEC and blockchain firm filing an appeal and cross-appeal, respectively.

However, once US President Donald Trump took office and leadership of the SEC moved from former chair Gary Gensler to acting chair Mark Uyeda, the commission began dropping multiple enforcement cases against crypto firms in a seeming political shift. Ripple pledged $5 million in XRP to Trump’s inauguration fund, and Garlinghouse and chief legal officer Stuart Alderoty attended events supporting the US president.

Despite support for the end of the case coming from both Ripple and the SEC, the August 2024 judgment and appellate cases leave some legal entanglements. Alderoty said in March that Ripple would drop its cross-appeal with the SEC and receive a roughly $75 million refund from the lower court judgment. It’s unclear what else may result from negotiations over a settlement in appellate court.

Acting chair Uyeda is expected to step down following the US Senate confirming Paul Atkins as SEC chair on April 9. During his confirmation hearings, lawmakers questioned Atkins about his ties to crypto, which could create conflicts of interest in his role regulating the industry. In financial disclosures, Atkins stated he had millions of dollars in assets through stakes in crypto firms, including Securitize, Pontoro and Patomak.

This pause in the appeal process is a strategic move that benefits both Ripple and the SEC. For Ripple, it provides an opportunity to continue its operations without the distraction of a protracted legal battle. For the SEC, it allows for a more thorough review of the case and the potential for a negotiated settlement that could set a precedent for future crypto regulations.

The legal battle between Ripple and the SEC has been closely watched by the crypto community, as the outcome could have significant implications for the regulation of digital assets. The pause in the appeal process is seen as a positive development, as it indicates that both parties are willing to work towards a resolution. The 60-day period for the SEC to submit a status report provides a clear timeline for updates on the case, ensuring that all parties involved are kept informed of the progress.

The court's decision to grant the joint motion to pause the appeal is a significant development in the ongoing legal battle between Ripple and the SEC. It provides both parties with the opportunity to negotiate a settlement and sets a clear timeline for updates on the case's progress. The pause in the appeal process is seen as a positive step towards resolving the legal dispute and could have significant implications for the regulation of digital assets.