SEC Nears End of Ripple Case After $125-Million Judgment

The US Securities and Exchange Commission (SEC) is reportedly nearing the conclusion of its enforcement action against Ripple Labs, a case that has been ongoing for over four years. This development comes after the parties involved filed an appeal and cross-appeal following a $125-million court judgment in August 2024. The civil case, initiated in December 2020, accused Ripple and certain executives of using XRP as an unregistered security to raise funds.

Ripple's chief legal officer, Stuart Alderoty, indicated that the SEC's case against Ripple is more advanced than many others that the regulator has dropped since the inauguration of US President Donald Trump and the departure of Chair Gary Gensler. Since January, the SEC has announced it will not pursue enforcement cases against several other companies, including coinbase, Consensys, and Kraken.

Alderoty noted that the presence of a judgment and the ongoing appeal adds complexity to the potential resolution. However, he remains optimistic about reaching a settlement with the SEC. If both parties agree to drop their appeals, the $125-million judgment would stand. If there is a dispute over the monetary judgment, Ripple and the SEC would need to jointly request a modification from a judge.

The SEC v. Ripple case is notable for being one of the first significant court rulings in favor of the crypto industry. Judge Analisa Torres ruled that the XRP token was not a security under the regulator’s purview, but only in regard to programmatic sales on exchanges. As of the latest updates, there have been no filings suggesting the SEC intends to drop the case.

The SEC's enforcement actions against Ripple began under former Chair Jay Clayton during Trump's administration. However, the commission increased the number of enforcement actions following the confirmation of Chair Gary Gensler in 2021. Ripple CEO Brad Garlinghouse suggested that the firm might not have gotten as involved in US politics if the commission had been led by someone other than Gensler. Under Garlinghouse, Ripple contributed significantly to political action committees, including $45 million to Fairshake and $25 million in November 2024.

Ripple also pledged $5 million in XRP to Trump’s inauguration fund and both Garlinghouse and Alderoty attended events in Washington, DC, as official guests. Alderoty personally donated over $300,000 to fundraising and political action committees supporting the US president. Critics have pointed to potential conflicts of interest, given the correlation between political contributions and the SEC dropping enforcement actions. Coinbase, another major Fairshake backer, had its SEC civil case halted in February, and its CEO, Brian Armstrong, attended a crypto summit at the White House along with Garlinghouse and others.

Alderoty suggested that the SEC's decision to drop cases is independent of any political donations and more reflective of Acting Chair Mark Uyeda’s perspective on the industry and related regulations. The US Senate has not yet scheduled a hearing to consider the nomination of the potential next head of the commission, Paul Atkins. Commissioner Hester Peirce indicated in February that the SEC would likely wait to set a crypto regulatory agenda until a new chair takes office.