Ripple vs. SEC Lawsuit Decision: Regulator Drops Case Against Ripple

Key Takeaways

• The SEC drops the case against Ripple.
• Following the news, XRP increased by double digits.
• The case was already removed from the SEC’s website some weeks ago.

The U.S. Securities and Exchange Commission (SEC) has ended its long-running legal battle with Ripple, dropping the case against the company behind XRP.

Soon after the news, the crypto recorded a double-digit increase, boosting hopes of an XRP ETF approval to come soon.

SEC Drops Case Against Ripple

The U.S. SEC has officially dropped its long-running lawsuit against Ripple, ending a four-year legal battle that cost XRP holders an estimated $15 billion, Ripple CEO Brad Garlinghouse announced on X on Mar. 19.

“I’m finally able to say this case is over,” Garlinghouse stated in a video address. “Looking back, it’s clear this lawsuit was flawed from the start.”

Under Acting Chairman Mark Uyeda, the SEC has shifted its stance on crypto, withdrawing from over 10 major enforcement cases, including those involving Coinbase, Uniswap Labs, and Kraken.

“Today marks a victory and a long-overdue retreat by the SEC,” Garlinghouse said, criticizing former Chairman Gary Gensler’s aggressive approach. “They weren’t protecting investors—they were using fear and intimidation against the entire industry.”

XRP Price Jumps on SEC News

XRP surged by 14% to $2.55 following news that the U.S. SEC has dropped its lawsuit against Ripple, marking a major victory for the crypto industry.

The rally comes as investors regain confidence in XRP, which had been weighed down by regulatory uncertainty for over four years.

XRP’s resistance levels are $2.70 and $3.05. A breakout above these points could trigger the next bullish rally.

However, according to technical indicators, if XRP fails to maintain support at $2.25, it may drop to $1.90 or even $1.54.

Wrapping Up

Reports have emerged that the Ripple-SEC lawsuit is in its final stages and could soon be resolved.

Sources said the holdup comes from Ripple’s legal team pushing for better terms following last year’s district court ruling, which imposed a $125 million fine and a permanent injunction on institutional XRP sales.

Ripple’s lawyers argue that if the SEC, under its new leadership, is reconsidering enforcement actions against other crypto firms amid shifting regulatory clarity, Ripple shouldn’t face penalties that others might avoid.

Agreeing to Judge Analisa Torres’s ruling would require Ripple to admit wrongdoing—something the SEC itself now appears uncertain about. With no clear precedent, negotiations have dragged on longer than expected.

All eyes are now on April 16, the deadline for Ripple to respond to the SEC’s January appeal.

SEC Removes Case From Website

The SEC has seemingly removed references to its ongoing lawsuit against Ripple from its website as the case moves to the Court of Appeals for the Second Circuit.

While some in the crypto community interpreted this as a sign that the years-long legal battle was nearing its end, others cautioned against reading too much into it.

One user on X dismissed the significance, stating, “The SEC website does not matter.”

Despite its removal from the SEC’s site, the case remains active in the nationwide PACER system.

An X user claiming to be an attorney confirmed this, saying, “I just logged in. The last entry is Ripple’s request for a time extension to file its brief. The case status is still shown as ‘Active.’ That may change soon.”

Meanwhile, another user clarified , “This is incorrect; they just moved it to the appeals section.”

With the case now under appellate review, the SEC’s decision to remove it from its website raises questions about its messaging strategy, but the legal battle is far from over.

Better Markets Backs SEC

Better Markets, a non-profit financial markets organization, filed an Amicus brief supporting the SEC in its case against Ripple Labs.

The brief outlined three arguments, asserting that XRP sales meet the Howey test criteria for securities.

It claimed that XRP transactions with retail investors should still qualify as securities, directly challenging the district court’s earlier ruling in favor of Ripple.

According to the filing, the decision contradicts statutory definitions and the Supreme Court’s interpretation of what constitutes an investment contract.

Better Markets also argues the court ignored the economic realities of XRP sales and urged a reversal of the decision on XRP retail transactions.

Attorney Jeremy Hogan weighed in on X , sharply criticizing the amicus brief. “Better Market’s Amicus Brief was hard to read,” he wrote. “Not because I don’t think this case will ever reach the appellate court, but because it completely misses (or misconstrues?) what the Trial Judge ruled.

Hogan explained that the district court judge didn’t reject the classification of XRP sales on exchanges as securities simply because buyers didn’t transact directly with Ripple.

Instead, the judge’s ruling focused on nuanced applications of the facts to securities law—a distinction Hogan felt the brief failed to address.

“This brief doesn’t tackle the main issue head-on, and that is very frustrating,” Hogan added. “Better Markets doesn’t like this application of the facts to the law, but instead of addressing either one directly, it simply argues that the outcome is wrong and that the SEC won’t be able to protect us from ourselves if this decision is upheld.”

XRP Still a Security

The U.S. SEC has officially filed an opening brief in its appeal against Ripple.

The SEC argued in its brief that Judge Analisa Torres’s 2023 ruling should be dismissed, asserting that XRP transactions are unregistered securities subject to regulation.

It claimed Ripple’s $2 billion XRP sales to retail investors violated federal securities laws and cited three precedents to argue it need not prove investors’ intentions.

Instead, the agency emphasized its mandate to enforce preventive measures for investor protection and criticized the district court’s focus on the seller’s identity.

The SEC also challenged the court’s distinction between institutional and retail investors, stating it undermines the Howey test’s objective criteria for defining investment contracts.

Ripple Optimistic

Pro-crypto attorney Jeremy Hogan criticized the SEC’s brief , calling it a futile effort by outgoing SEC Chair Gary Gensler.

Hogan likened the appeal to a pointless exercise, remarking, “Half the brief was spent just reiterating what the trial court ruled. It’s like trying to talk a girl into going out with you and spending half your time telling her why she said ‘no’ previously.”

Ripple’s Chief Legal Officer Stuart Alderoty agreed, dismissing the SEC’s arguments as a rehash of previously rejected claims.

Alderoty expressed confidence that the appeal would likely be dropped under the next administration, highlighting Ripple’s optimism about the future.

“We’ll respond formally in due time. For now, know this: the SEC’s lawsuit is just noise. A new era of pro-innovation regulation is coming, and Ripple is thriving,” Alderoty commented .

Crypto Dad Predicts End to Ripple vs SEC

Giancarlo, a fierce critic of Gensler, said in a recent interview that he believed the SEC would drop its case against Ripple Labs once the chairman had been replaced.

When questioned about the topic, Giancarlo said, “I think they should and will. I would bet they would.”

“I would recommend that it’s time for regulatory agencies to drop a lot of these cases where they’ve lost at the trial court,” Giancarlo added.

Known in the industry as “Crypto Dad,” Giancarlo played a significant role in SEC Chairman Gensler’s departure, labeling his enforcement actions counterproductive and lacking nuance.

Giancarlo, former chairman of the Commodity Futures Trading Commission (CFTC) until 2019, claimed the SEC lacked talent.

“Talent has left. What’s left are dead-enders, people that don’t want to come to the office,” he said.

Gensler To Leave Before Court’s Deadline

Gensler, the SEC chair who has been a driving force behind the agency’s aggressive pursuit of the crypto industry, will resign on Jan. 20, when President-elect Donald Trump takes office.

The timing of Gensler’s departure coincidentally comes just five days before a pivotal deadline in the SEC’s closely watched case against Ripple Labs.

On Jan. 15, the U.S. Court of Appeals instructed the SEC to finalize its briefs in the ongoing appeal of a lower court ruling that partially vindicated Ripple.

It’s likely, with Gensler’s departure, the case could come to an end.

Court Gives SEC January Deadline

Ripple Files Its Appeal

Ripple is challenging four key issues raised by the SEC, including the legally binding nature of an investment contract, the classification of institutional XRP sales, the fair notice defense, and the validity of the injunction.

Ripple’s CEO, Brad Garlinghouse, and Chief Legal Officer, Stuart Alderoty, have expressed confidence in their chances of winning the appeal.

They argue that the SEC’s case is weak, particularly in light of the court’s previous ruling affirming XRP’s non-security status.

However, the SEC’s recent request for an extension to file its principal brief has raised questions about the agency’s confidence.

This development suggests that the SEC may be facing challenges in formulating a strong argument to support its appeal.

Extra Time Filing

In a rare occurrence, the SEC failed to meet the Oct. 16 deadline to file its objections with the Second Circuit Court, sparking confusion and optimism among observers.

The development had fueled speculation that the agency might be nearing a settlement with Ripple.

However, those hopes were short-lived.

On Thursday, Oct. 17, the SEC filed its Form C , outlining the grounds for its appeal and likely pushing the case into 2025.

The appeal centers on several key issues, including Ripple’s programmatic sales of XRP on digital asset trading platforms, the alleged aiding and abetting of these sales by Ripple’s executives, and Ripple’s distribution of XRP to employees.

The SEC is seeking to overturn Judge Torres’s ruling that these activities do not constitute securities violations.

Notably, the SEC is not contesting the $125 million penalty Judge Torres imposed on Ripple, nor is it challenging her decision to deny disgorgement.

Instead, the agency is focused on establishing a precedent that would allow it to regulate similar activities in the future.

With the appeal now formally lodged, the case is set to drag on, leaving the crypto industry wondering what’s next.

Ripple Executives Reactions

The SEC’s late filing has drawn swift responses from the Ripple’s top executives.

They criticized the regulator’s actions, accusing it of making up the rules as it goes along.

Brad Garlinghouse, Ripple’s CEO, didn’t mince words, saying the SEC’s appeal is “proceeding normally for an agency that makes up their own rules as they go!”

Stuart Alderoty, Ripple’s chief legal officer, was more measured in his response but still emphasized that the court’s earlier ruling stands.

 “No surprises here — once again, it has been made clear. The Court’s ruling that “XRP is not a security” is NOT being appealed. That decision stands as the law of the land. Stay tuned for Ripple’s Form C to be filed next week.”

SEC Misses Deadline

Following its notice on Oct. 2, the SEC had a 14-day window to file Form C and Form D, with a deadline set for Oct. 16.

Contrary to speculation, the Columbus Day holiday on Monday, Oct. 14, did not extend the deadline.

Unlike business days, court deadlines include weekends and holidays unless the court specifies otherwise.

Despite being on time for every filing, the SEC surprised everyone by missing this crucial deadline.

Form C is necessary to appeal the court’s decision. Failure to file it on time may result in the appeal being dismissed.

However, there is some confusion over the deadline date.

Some suggest that the deadline is Oct. 18, considering the SEC’s notice was docketed on Oct. 4 in some court systems.

Ripple Labs has filed a notice of cross-appeal in its ongoing tussle with the SEC, which aims to address all aspects of the case and eliminate any remaining ambiguities.

The cross-appeal is in response to the SEC’s appeal of Judge Analisa Torres’s August ruling. The ruling found that XRP sales to institutional clients violated U.S. securities laws and imposed a $125 million civil penalty on Ripple.

SEC Appeal’s Judge Torres XRP Ruling

The SEC’s surprise filing leaves room for interpretation, as the agency failed to specify which aspects of Judge Torres’s July ruling it intends to challenge.

The ambiguity has sparked intense speculation, with some wondering if the regulator is seeking to reverse the $125 million fine Ripple was ordered to pay or if it will target the court’s more significant pronouncement: that programmatic sales of XRP to retail customers do not constitute a securities transaction.

According to Kroll, a source close to the matter has shed some light on the filing, but a definitive explanation remains elusive.

As the appeal unfolds, market observers are closely watching the developments, aware that the SEC’s move could establish a crucial precedent for the regulation of digital assets under U.S. securities law.

At the heart of the debate is a complex and nuanced understanding of crypto transactions, which—as the initial ruling made clear—are subject to scrutiny not because of the tokens themselves but because of the nature of the transactions in which they are involved.

Potential Time Line of SEC Appeal

If the SEC’s decision to appeal the Ripple ruling has brought a sense of déjà vu for the embattled company, the timeline of what’s to come may only add to the feeling of Groundhog Day.

As the months drag on, the following scenario may unfold, sparking another protracted fight between the two parties.

The SEC is expected to file its main brief by early January 2025, although the agency will likely utilize the allowed 30-day extension, nudging the deadline into the New Year.

Ripple, never one to shy away from a fight, will almost certainly cross-appeal, with its opening brief landing around the same time. The company’s Chief Legal Officer Stuart Alderoty announced they will certainly retaliate.

The opposition briefs will follow in short order, first due by early February 2025, before Ripple takes its own 30-day extension, pushing the deadline into early March. The reply briefs are then expected to surface by the end of March 2025, marking the final round of written arguments.

Only then will the stage be set for an oral argument, which could take place as early as September or October 2025. It’s likely to be a closely watched showdown, with representatives from both sides vocally defending their positions.

Finally, after months of anticipation, a ruling from the 2nd Circuit Court of Appeals will bring the proceeding to a close.

However, it’s a moment that’s still a good 18 months away, with the most optimistic forecast suggesting January 2026. Realistically, though, many are bracing for a decision that won’t surface until March or April 2026, casting a long shadow over Ripple’s continued operations.

The SEC’s Appeal

The battle between Ripple and the SEC ended with a sizeable fine of $125 million for the crypto firm, but the judgment, arguably, has gone in Ripple’s favor.

Whilst the SEC has 60 days to appeal the court decision, Garlinghouse is confident that the strength of the ruling is undeniable. Speaking at Korean Blockchain Week 2024 in South Korea, he stated:

“Regardless of whether they choose to appeal, we do not see any credible path for the SEC to challenge the core ruling, which is that XRP is not, in and of itself, a security.”

There are concerns that the XRP token itself could take a sizeable hit if the SEC seeks to challenge the court’s $125 million penalty for Ripple, though it remains unclear if the SEC is willing to take that bet after a grueling four-year legal battle.

The regulator has until Oct. 6 to appeal the decision. If it does, the case could drag on into 2025.

There are also rumors suggesting that Ripple has already paid the fine, which it was required to do within 30 days of the ruling. If true, the payment could suggest an ‘official’ closure of the legal battle.

The Case Is Over

District Judge Analisa Torres delivered a decisive blow to the SEC by reducing the penalty in the Ripple Labs case by 94%. The court partially granted the SEC’s motion for relief, imposing a civil penalty of $125 million instead of the $2 billion initially sought.

“This is a victory for Ripple, for the industry, and for the rule of law. The SEC’s obstacles against the entire XRP community are gone,” said Ripple’s CEO, Brad Garlinghouse .

The SEC had aimed for three primary remedies: a permanent injunction restraining Ripple from further violations of Section 5 of the Securities Act, restitution of $876.3 million with $198.2 million in pre-judgment interest, and a civil penalty equal to the restitution amount.

Ripple successfully argued against the SEC’s requests, asserting that such a large injunction and restitution were unwarranted and that any civil penalty should be significantly lower, not exceeding $10 million.

The SEC’s motion for relief and entry of final judgment was granted in part and denied in part.

Ripple’s argument led to a significantly reduced penalty. The court’s ruling also prohibits the company from further securities law violations, marking an important win for Ripple and the broader crypto community.

A Win For Ripple?

Judge Analisa Torres had previously ruled that XRP sales on secondary markets did not constitute securities transactions, leaving the fine for initial sales to professional investors as the remaining issue.

Although substantial, the fine was considered relatively small by the markets. This led to an 18% rise in XRP to $0.6075, signaling market relief after the prolonged legal battle.

Wednesday’s order follows the judge’s July 2023 decision, which concluded that Ripple violated federal securities laws by selling XRP directly to institutional customers.

However, Ripple’s programmatic sales of XRP to retail customers through exchanges were deemed not to violate securities laws. The SEC’s attempt to appeal this part of the ruling was unsuccessful.

Judge Torres’ decision has broad implications for the cryptocurrency market and digital asset regulation.

The clarity on institutional transactions could encourage more institutional participation in the cryptocurrency market. Meanwhile, the unresolved issue of sales to retail investors remains a key concern for Ripple and the industry as a whole.

What’s Next?

Ripple, SEC Rumored to Meet

In a notice on the SEC website, the agency has confirmed that Commissioners will meet to discuss the settlement and resolution of an unnamed enforcement action.

While images circulated on X imply that the meeting will address the Ripple litigation, such events are frequent, and neither party has confirmed whether they are in settlement talks.

Nonetheless, CEO Brad Garlinghouse’s recent comments have hinted that a deal could be close. Although he refused to be drawn on whether settlement talks were underway, he said there is “one final piece” that needs to be dealt with but that he “[expects] a resolution very soon.”

Ripple CEO Hints at Imminent Resolution in SEC Lawsuit

In a recent interview , Garlinghouse revealed that Ripple has spent over $150 million on legal fees during its three-year battle with the SEC, stating that such expenditure is unsustainable for every token.

He emphasized the case’s importance for the broader cryptocurrency industry and reiterated Ripple’s commitment to pushing for regulatory clarity. Garlinghouse also stressed that cryptocurrency should not be a partisan issue in the US, acknowledging that there is legislative momentum across the political spectrum.

The Ripple CEO criticized the current U.S. approach to cryptocurrency regulation, calling it “frustrating” and criticizing the SEC’s ongoing legal actions against the industry.

He argued that SEC Chair Gary Gensler seems “at war” with crypto, with the agency continually expanding its legal team to initiate more lawsuits. Garlinghouse advocates for regulation that does not rely solely on enforcement, noting that most players in the crypto industry are willing to comply with clear, fair regulations.

Ripple’s XRP token saw a significant price rally earlier this week, fueled by settlement rumors, but the gains were short-lived following news that a private meeting between Ripple and the agency was reportedly canceled. On July 22, at the time of writing, the price hovered around $0.6 .

Ripple’s Monthly XRP Sales Draw Criticism for Suppressing Prices, Community Poll Shows Dissatisfaction

Ripple releases $1 billion worth of its native cryptocurrency, XRP , from escrow each month, with 80% (800 million XRP) returned to escrow and the remaining 20% (200 million XRP) used to support company operations. This practice of periodic sales has drawn criticism from some community members who believe it suppresses the XRP price.

Reflecting this sentiment, a recent Good Morning Crypto podcast poll revealed that nearly 68% of 2,000 voters are dissatisfied with Ripple’s strategy, arguing that these sales hinder the price from rising.

In May, the SEC emphasized the importance of XRP’s financial status in its legal arguments, asserting that the court’s analysis must determine appropriate remedies. According to a recent post by defense lawyer James K. Filan, Ripple has contested this claim.

SEC and Ripple Clash Over Confidential Financial Details in Court

In its response on May 20, the SEC urged the court to dismiss Ripple’s request. The SEC argued that Ripple’s current assets, recent sales figures, revenues, expenses, and the discounts offered to institutional investors are essential for assessing remedies. The SEC also accused Ripple of trying to hide the extent of these discounts, which it described as discriminatory.

In its latest response supporting its motion to seal, Ripple disagrees and states that its current financial status is irrelevant to the court’s analysis, emphasizing that it is not claiming an inability to pay any assessed penalty. Ripple argued that the SEC should not be permitted to force disclosure of Ripple’s sensitive financial information based on arguments that lack foundation, particularly when the court can dismiss those arguments without needing to refer to any confidential details.

Arguing for its rights to privacy and confidentiality, Ripple aimed to shield itself from the “significant harm” that could result if certain documents were made public.

According to Ripple’s court filing , the company attempted to seal specific documents related to the SEC’s motion for judgment and remedies. They requested “narrowly tailored redactions” for the briefing on the Remedies Motion and some exhibits.

Additionally, Ripple sought to have “highly sensitive and confidential” information completely sealed, emphasizing the need to protect this data from public disclosure.

SEC Counters Ripple’s Motion to Dismiss Expert Materials in Ongoing Legal Battle

At the beginning of May this year, the regulator submitted its opposition to Ripple’s request to dismiss new expert materials, focusing on testimony referred to as the “Fox Declaration.” Ripple had previously contested this declaration, arguing that it constituted an unsolicited expert opinion.

The SEC responded to Ripple’s objections by describing the testimony as “standard summary evidence in support of calculations for disgorgement.” They argued that such evidence is commonly used and appropriate for determining financial remedies in legal proceedings.

It then stated :

“It’s not an expert report, does not rely on specialized experience, and does not render any opinions, let alone an “expert” one. Nor does it present the testimony of a percipient witness. Rather, it applies basic arithmetic to Ripple’s financial records to streamline the presentation of the evidence to Judge Torres […] The court should deny Ripple’s motion.”

The agency also expanded its argument by noting that the Fox Declaration included data sourced from documents produced by Ripple, such as tax returns and financial statements. The SEC highlighted the importance of this information in determining the appropriate financial penalties in the case, underscoring the declaration’s critical role in shaping the trial’s outcome.

The SEC had also emphasized that Federal Judge Torres had previously dismissed similar objections raised by Ripple, suggesting the possibility of the court siding with the company again. This reference is intended to bolster the SEC’s argument that the issues contested by Ripple have already been addressed and resolved by the court in past rulings. According to the Commission, these historical decisions reinforce the validity of their current position in the ongoing legal battle.

SEC Doubling Down: Files Remedies Brief, Seeks Injunction

As discussions surrounding the Ripple vs. SEC lawsuit heat up, the SEC has submitted its redacted remedies reply brief and supporting documents to the court.

This development, highlighted by influential crypto lawyer James K Filan , has stirred conversations within the crypto community.

Amid the ongoing legal battle between Ripple and the SEC, a significant development has emerged. The SEC filed its redacted remedies reply brief along with supporting exhibits. The SEC’s argument primarily centers on Ripple’s alleged recurrent violations and the necessity of injunctive relief to prevent future infractions.

Central to the SEC’s stance is Ripple’s history of unregistered sales of its XRP token, dating back to 2013, and its purported plans to introduce a new unregistered crypto asset. The SEC contends that Ripple’s past actions pose an ongoing risk, justifying regulatory intervention to protect investors and uphold market integrity.

In response to Ripple’s defenses, the SEC had dismissed similar arguments in prior cases, such as Coinbase, asserting that Ripple’s purported changes to prevent future violations are insufficient.

Furthermore, the SEC challenges Ripple’s objections to the disgorgement of ill-gotten gains, highlighting the harm inflicted on institutional investors due to undisclosed financial terms.

Ripple Lawyer Disputes SEC’s Claims of Financial Harm, Injunction Need

In response to the SEC’s latest filing, pro-XRP lawyer Bill Morgan closely examined key issues raised, particularly concerning financial harm and the potential for a permanent injunction.

While the SEC argues for a broad interpretation of financial harm, challenging Ripple’s stance, Morgan expresses skepticism about the likelihood of disgorgement but anticipates an appeal.

Regarding the permanent injunction, the SEC asserts that Ripple’s primary business revolves around XRP sales to institutions, thus justifying the need for an injunction. Furthermore, the SEC argues that Ripple’s defense on On-Demand Liquidity (ODL) sales lacks merit, potentially leading to a broad permanent injunction.

However, Morgan raises concerns about the court’s previous classification of ODL sales as investment contracts and foresees appellate challenges for Ripple. Given this, the current focus is on demonstrating that ODL sales involve immediate consumptive use, a crucial aspect of Ripple’s defense strategy.

Ripple vs. SEC Nears Climax: Legal Battle Holds Weight for Crypto Industry

On the flip side, legal expert Jeremy Hogan offers a critical perspective , suggesting that the SEC’s arguments lack substance.

Hogan points out the SEC’s failure to adequately address crucial issues such as Ripple’s On-Demand Liquidity (ODL) sales and the absence of new information regarding damages. Additionally, he highlights what appears to be the SEC’s lack of effort, implying a weak stance in the ongoing legal battle.

With both parties submitting their briefs, anticipation builds as the case awaits the judge’s decision.

Alderoty: Gensler Prejudged Ripple’s Case

The ongoing legal battle between Ripple and the SEC took a new turn in October 2023 with the remarks made by SEC Chair Gary Gensler.

In a speech at the Securities Enforcement Forum 2023, Gensler referenced the SEC’s role as a protector of investors and a prosecutor of dishonest practices.

Ripple’s Chief Legal Officer, Stuart Alderoty, criticized Gensler’s recent remarks, which referenced the wisdom of the inaugural SEC Chair, Joseph P. Kennedy. The remarks highlighted the agency’s role as a collaborator with upright enterprises and a prosecutor of dishonest practices.

However, amid these statements, Gensler also included several quotes from leaders, with one of the most notable being: “We shall not prejudge, but we shall investigate.” This speech took place at the Securities Enforcement Forum 2023.

Upon disseminating Gensler’s speech , Alderoty swiftly responded to the comments. In his reply, Alderoty explicitly stated that Ripple’s case had been prejudged. Contrary to Gensler’s assertions, Ripple’s Chief Legal Officer seemed to underscore the true nature of the ongoing legal dispute.

He added: “Firstly, Ripple wasn’t charged for ‘Dishonesty,’ and secondly, the case was all ‘prejudged’ with a compromised Hinman’s Bill.”

William Hinman, a key figure in shaping the regulatory status of cryptocurrencies, is accused of having a potential conflict of interest due to later affiliations with a law firm involved in the Ripple case.

Expanding on his statement, Alderoty pointed out that the SEC had sued Ripple and various other firms without conducting prior investigations.

Furthermore, Stuart Alderoty tweeted about the SEC’s recent legal setbacks. He highlighted the agency’s courtroom losses and the criticism it faces from judges for what is described as “shady behavior.” The government’s internal auditor joined in the criticism, rebuking the SEC and raising questions about its internal practices.

Ripple And SEC Outline Discovery Roadmap

The ongoing XRP lawsuit, a central focus within the cryptocurrency community, reached a pivotal juncture under the guidance of Judge Analisa Torres in the Southern District of New York. A prominent attorney overseeing these proceedings has provided a crucial update.

Ripple Labs and the SEC have now each submitted their proposed schedules, delineating the roadmap for the settlement phase.

During this phase, encompassing remedies discovery and briefing, a significant legal battle is underway, setting the stage for negotiations that will significantly influence the course of the case. What sets this phase apart is the definition of ‘permissible discovery terms,’ which essentially outlines the boundaries for exploration by both parties.

The recent SEC letter , dated Nov. 9, is significant as it delineates the permissible discovery scope. A mutual agreement acknowledges that permissible discovery should primarily focus on events predating the SEC’s initial complaint against Ripple—a critical aspect for settlement talks.

But what makes this settlement a point of contention?

Pros of Settlement

A potential settlement in the XRP lawsuit carries both advantages and disadvantages. On the positive side, it could bring much-needed clarity to XRP’s status, benefiting the cryptocurrency industry and its investors.

A settlement would also save substantial legal costs by avoiding a protracted trial, enabling more efficient resource allocation. Furthermore, it would remove the cloud of regulatory uncertainty hanging over Ripple, fostering confidence in its operations.

Cons of Settlement

However, settling the case may also have drawbacks. It could set a precedent for future crypto-related legal battles, potentially influencing regulatory approaches.

Additionally, it might miss the opportunity to establish clear industry regulations, leaving lingering ambiguity. Finally, the complex process of agreeing on terms and timing for a settlement could potentially prolong the case’s resolution.

Latest Update

Ripple Labs and the SEC have agreed to focus on events preceding the SEC’s complaint. The SEC has requested 90 days for discovery related to remedies, a proposal accepted by Ripple, demonstrating their willingness to cooperate.

However, Ripple retains the right to challenge any discoveries made post-complaint. The SEC has also been granted permission to depose a key witness, Anthony M. Bracco , within the next 90 days.

Brad Garlinghouse, Ripple’s CEO, spoke during DC Fintech Week 2023.

“I think that definitely could happen. […] We’ve said this publicly. We’re in it until the end.”

The Ripple CEO also said there was a possibility of the Supreme Court and the chances of Supreme Court victory.

“That is a good thing. The current Supreme Court, we’d love to see the Vegas odds on how that would go. They have not been friendly to regulators.”

Discussing the U.S. regulatory landscape, Garlinghouse commented :

“It has become a political liability. The way the SEC has approached this in the United States, we are looked at here in the US, relative to other countries, as stuck.”

What Has Led to This Point?

The battle between Ripple and the SEC started a few years ago — however, the ebbs and flows of this case are worth noting as one side and then the other appears to gain the upper hand in certain instances.

The SEC has previously filed an interlocutory appeal regarding the XRP ruling, which has contributed to the negative attitude toward its price.

As a result, Ripple had to respond by Sept. 1 and the SEC by Sept. 8 to address any additional responses that Ripple may provide.

Ripple wants to “dramatically reduce” the penalties, while the SEC wants the full $770 million in institutional XRP transactions. Therefore, the outcome of the settlement talks and the ultimate court ruling will determine the amount the blockchain company would have to pay.

Before this, attorney John E. Deaton stated that he believed Ripple would win the case 99.9% of the time if the company settled for $20 million or less.

Meanwhile, attorney Jeremy Hogan clarified that the “fair” sum must be in net earnings from the sales rather than gross.

Ripple Wins a Partial Victory

After nearly two years of litigation, Ripple landed a significant win against the SEC. On July 13, U.S. District Judge Analisa Torres declared that Ripple did not violate federal securities law by selling its XRP token on public exchanges.

The announcement caused a domino effect of positive outcomes. Ripple’s native token saw a huge surge in price, another big exchange had its hope revitalized regarding its own SEC case, and the market may have changed its perspective on altcoins.

The judge ruled that Ripple did not violate the securities law by selling $1.3 billion worth of XRP. Judge Torres decided that Ripple’s XRP sales on public cryptocurrency exchanges were not offers of securities under the law because they do not guarantee profit.

On top of that, Ripple sold XRP in “blind bid/ask transactions,” and therefore, buyers “could not have known if their payments of the money went to Ripple or any other seller of XRP.”

Ripple vs. SEC History

In 2020, the SEC alleged Ripple raised over $1 billion in 2013 through the sale of XRP in an unregistered security offering to investors. Ripple then responded that XRP is not a security and that the SEC lacked fair notice.

The SEC then responded by requesting the judge to have a hearing immediately. In June 2021, the court extended the SEC’s deadline for disclosing its internal crypto trading policies.

Ripple Labs defended itself by saying, “XRP does not qualify as an investment contract.” It claimed the company itself never entered any such contract with its investors in the first place. Furthermore, Ripple claims XRP remains outside the SEC’s range since it is a virtual asset.

In a recent interview, Ripple Labs president Monica Long commented that “both the facts and the law” are on Ripple’s side.

Ripple vs. SEC Timeline

With additional reporting from Prashant Jha and Giuseppe Ciccomascolo.