(Bloomberg) — The Securities and Exchange Commission asked a federal judge in New York to dismiss its case against both the co-founder and chief executive of crypto firm Ripple.
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The SEC and Ripple intend to meet regarding a briefing schedule to discuss “what remedies are appropriate against Ripple” for violations related to institutional sales of its XRP tokens, SEC lawyers wrote on Thursday.
Bloomberg Intelligence analyst Elliot Stein said the move allows the SEC to appeal parts of the case it lost, rather than having to prosecute individuals. He also said that the SEC likely wanted to avoid “bad facts coming to light in the individuals’ trials that could jeopardize the SEC’s victory over direct institutional sales.”
According to the company’s press release, Ripple called the regulatory filing an “astonishing dedication by the government.” “This is not a compromise. This is a capitulation by the SEC,” tweeted Stuart Alderotti, the company’s chief legal officer.
The price of XRP rose as much as 6% to about 52 cents in New York.
The regulator accused co-founder Christian Larsen and Chief Executive Officer Bradley Garlinghouse of misleading investors in the XRP token by selling more than $1 billion worth of it without registering it. A federal judge ruled that Ripple’s sale of XRP to the general public on exchanges does not amount to an offering of securities.
The SEC, led by Chairman Gary Gensler, has taken a tough stance on crypto, claiming that many products should be registered with the agency and moving forward with multiple enforcement actions against industry players. The pace of action accelerated in the wake of last year’s market downturn and the collapse of FTX, in which the SEC sued market leaders Coinbase Global Inc. and Binance Holdings.
The industry has responded by claiming that the SEC is overreaching, a view that has been bolstered by recent rulings in favor of crypto firms in lawsuits involving the regulator, including July’s Ripple decision. Another blow to the SEC came when an appeals court overturned its decision to block Grayscale Investments LLC’s proposed spot Bitcoin exchange-traded fund. The SEC said last week that it would not appeal that decision.
–With assistance from Olga Kharif.
(Updated with company statement)
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