SEC Drops Ripple Appeal, XRP Not a Security

After nearly four years of intense legal battles, the protracted case between the U.S. Securities and Exchange Commission (SEC) and Ripple has reached a significant turning point. The SEC, which initially filed the lawsuit in December 2020, claiming Ripple’s cryptocurrency XRP was an unregistered security, has now dropped its appeal. This development marks a pivotal moment in the ongoing legal dispute, which has had far-reaching implications for the broader cryptocurrency industry.

In an interview, CEO Brad Garlinghouse reflected on the lengthy legal battle, stating, “This has been a long battle. But now, there is a lot more certainty for Ripple, and frankly, for me personally, because the SEC had sued me.” He revealed that the SEC has officially abandoned its appeal in the case, which had been ongoing since the lawsuit was filed in December 2020. Ripple scored a key victory in the summer of 2023 when Judge Torres ruled that XRP, the cryptocurrency at the center of the case, is not a security. This ruling marked a significant milestone in the case, providing clarity on the legal status of XRP.

Despite the SEC’s withdrawal from its appeal, Garlinghouse clarified that the case is not entirely over. A cross-appeal is still pending, but the dynamics have shifted. “We go from being the defendant to the plaintiff,” he explained. “Now, we’re in the driver’s seat, deciding how we want to proceed.” This shift in the legal landscape allows Ripple to take a more proactive role in the resolution of the case, potentially influencing the outcome in its favor.

For Ripple, the outcome of this case is crucial not just for the company itself but for the broader crypto industry. Garlinghouse noted that Ripple had spent a significant amount defending the case, a legal expense not only aimed at protecting the company but also supporting the entire cryptocurrency sector. “It was important for the whole industry,” he said. The resolution of this case could set a precedent for how cryptocurrencies are regulated in the future, impacting the entire industry.

Garlinghouse also commented on the broader implications of the case’s resolution, especially in terms of the legal status of XRP. “The SEC’s decision to drop its appeal is a significant moment,” he stated. “It’s clear now that the SEC likely regrets bringing the case in the first place, especially given the judge’s ruling.” However, some elements of the case are still unresolved, such as the $125 million civil penalty Ripple was ordered to pay. This fine is currently held in escrow, pending the final resolution of the case.

Ripple has expressed interest in potentially reclaiming the $125 million fine, given that no investors were harmed in the process. “There was no investor harm, no investors lost money,” Garlinghouse remarked, suggesting that the penalty may be reconsidered as the case nears its conclusion. This development could further alleviate the financial burden on Ripple, allowing the company to focus on its growth and innovation in the cryptocurrency space.