SEC Ends Legal Battle with Ripple in XRP Case, Ripple CEO Says
Key Takeaways:
- The legal dispute wrapped up without XRP being classified as a security.
- The outcome may shift regulatory thinking and spark discussions on asset oversight.
- Market players now face debates on clearer, steadier legal frameworks.
The U.S. Securities and Exchange Commission (SEC) has officially ended its legal proceedings against Ripple, concluding a four-year court battle over XRP’s classification, according to a statement on X by Ripple CEO Brad Garlinghouse on Wednesday.
Garlinghouse described the 2020 lawsuit as the start of broader regulatory action targeting the cryptocurrency sector. He called the SEC’s decision to end the case “a long overdue surrender.”
Ripple Legal Win May Shape Future Crypto Regulations
Throughout the case, Ripple argued that XRP is not a security and criticized the SEC’s approach.
Garlinghouse claimed the regulator wiped out billions of dollars in value from XRP holders while pursuing a non-fraud case.
“This was lawfare, a war of legal terror,” said Garlinghouse. “Fortunately, the judge rebuked the SEC multiple times in this journey.”
“The SEC wasn’t seeking justice. They were seeking to win a case at any cost,” Garlinghouse said, adding that the judge overseeing the case sanctioned the agency for discovery abuses and criticized its handling of the law.
With the case now resolved, Garlinghouse suggested that Ripple’s outcome could influence broader regulatory clarity.
“These wins have laid the groundwork for policy makers to adopt a set of rules for crypto that are in line with nearly a century of securities law,” he said.
Garlinghouse thanked Ripple employees, legal teams, and XRP supporters, calling the conclusion a “turning point for the industry.”
Seth Goertz, partner at Dorsey & Whitney LLP and former federal prosecutor, said the ruling is a pivotal change.
“The Ripple Labs case, in particular, is a big win because the District Court had ruled that the particular cryptocurrency at issue there was not a security under the Howey test, which the SEC was appealing, but has now dropped, establishing binding legal precedent that certain cryptocurrencies are not a security,” he said.
“The hope from the crypto community writ large is that it will now be hard for the SEC to reverse course should it ever want to do so in the future,” Goertz said.
XRP Climbs to Third Largest Crypto by Market Cap
XRP surged over 10% following the announcement, trading at $2.56 with a 14.5% increase over the past 24 hours.
CoinMarketCap data shows XRP became the third largest cryptocurrency by market capitalization, reaching $149 billion and surpassing Tether’s $143 billion valuation.
After dropping its lawsuit against Coinbase, the SEC’s decision to end the Ripple case signals a shift in its enforcement strategy.
Recent lawsuits have increased pressure on the agency to reconsider its approach to digital asset regulation.
The outcomes of these cases have led to congressional calls for legislation to clarify crypto regulations and define the SEC’s role.
Daniel Stabile, partner and co-chair of the Digital Assets and Blockchain Technology Group at Winston & Strawn LLP, said the SEC’s action is a welcome relief for the industry, specifically for digital asset exchanges that are attempting to navigate through regulatory uncertainty.
“It should give further conviction to exchanges that the SEC will not pursue ‘theory’ cases, in which the SEC, under prior leadership, initiated actions against exchanges (and many others in the digital asset ecosystem) in unsettled regulatory areas,” said Stabile.
“While the SEC has signaled that it will continue to bring fraud and market manipulation cases in the crypto space, the industry has a justified high degree of confidence that the SEC’s general approach with crypto is to allow the normal regulatory and legislative process play out,” he added.
Industry representatives also argue that enforcement actions under unclear rules could weaken market confidence and limit growth.
Frequently Asked Questions (FAQs):
Regulators could revise current crypto guidelines to clearly define asset classifications and improve enforcement practices. This may lead to a more predictable legal framework and stable market conditions.
Because the regulatory stability is felt, the favorable result will enhance institutional trust and motivate more investment in crypto.
The case’s verdict may have an impact on global regulatory organizations and result in standardized international standards for crypto supervision.
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