The U.S. Securities and Exchange Commission (SEC) has decided to no longer pursue allegations that Ripple CEO Brad Garlinghouse or Executive Chairman Chris Larsen caused the company to violate federal securities laws in its XRP transactions, resulting in the cancellation of a trial set for next year. They were also accused of participating in crypto giveaways. This marks another win in the agency’s ongoing lawsuit against the company.Thank you for reading this post, don't forget to subscribe!
In a filing made on Thursday afternoon, both parties agreed to voluntarily dismiss the lawsuit against the two executives with prejudice, meaning it cannot be filed again. The filing also mentions that the SEC will continue to pursue its claims against Ripple.
“For almost three years, Chris and I have been the target of unfounded accusations from a rogue regulator with a political agenda,” stated Garlinghouse in a statement. “Instead of going after criminals who stole customer funds on offshore exchanges and gaining political mileage doing so, the SEC went after the good guys.”
Ripple achieves a significant victory, although partial. The triumph came in July when the presiding judge ruled that the company had not violated federal securities laws by making XRP available to retail investors through exchanges. However, in the same ruling, Judge Analisa Torres stated that the company had breached federal securities laws by directly selling XRP to institutional investors.
The recent filing suggests that this marks the second phase where the SEC and Ripple will continue discussions.
“The SEC and Ripple plan to meet and discuss potential briefing schedules regarding the pending matter, which involves determining appropriate measures against Ripple for infractions related to institutional sales of XRP,” the filing explains.
Earlier this month, the SEC had its attempt to appeal the court’s decision in the Ripple case rejected.
The SEC has faced a series of setbacks in its extensive efforts to crack down on crypto firms accused of violating securities laws. SEC Chairman Gary Gensler has argued that almost all cryptocurrencies should be classified as securities under the agency’s jurisdiction. However, U.S. judges have repeatedly emphasized that it is not that straightforward.
In the absence of immediate crypto regulatory legislation from Congress, these legal battles could potentially define the standards by which the U.S. government regulates digital assets.
Meanwhile, Ripple has stated that it now conducts approximately 90% of its business outside of the United States.
Kathryn Kirkpatrick Bosse, chief legal officer of Cboe Digital, responded on Twitter, suggesting that the agency may have dropped cases against individuals as a legal strategy.
“This permits them to quickly move towards appealing against Ripple’s decision. Otherwise, they would have had to wait until the conclusion of that lawsuit in late spring,” she wrote.
UPDATE (October 19, 2023, 21:18 UTC): Adds comment from CEO Brad Garlinghouse.
UPDATE (October 19, 2023, 21:38 UTC): XRP adds value.
UPDATE (October 19, 2023, 21:52 UTC): Adds a disclaimer-comment from the SEC and adds a comment from the CBOE Digital Advocate.