SEC drops its appeal against Ripple, opening the door for potential fine reductions and regulatory clarity

Ripple may negotiate its $125M fine down to $10M as talks with the SEC continue, shaping its future compliance and operations.

The U.S. Securities and Exchange Commission (SEC) has now dropped its appeal against Ripple in a significant development. This move follows a recent pattern by the SEC in cases like Coinbase (NASDAQ:COIN) and Kraken, where the regulator chose not to pursue appeals further.

However, while the appeal has been dropped, the case isn't entirely closed yet. Ripple still has a pending cross appeal, and the initial $150 million (later amended to $125 million) fine remains to be finalized.

This case centers around Ripple’s alleged unlawful sale of unregistered securities in the form of its cryptocurrency, XRP.

Thinking Crypto’s host, Ben Armstrong, was joined by attorney Fred Rispoli to discuss what this latest development means for Ripple and the broader crypto industry.

Federal Agencies and Their Political Factor

Rispoli explained that federal agencies like the SEC are often influenced by political considerations in their decision-making. This aspect of government bodies has been a subject of discussion for a long time, and Rispoli highlighted a shift in the past two decades.

He explained that there are several levels of bureaucracy involved, and the process can be quite lengthy. In contrast, cases like Coinbase and Kraken went through more stages before reaching the Supreme Court level.

However, Ripple’s case has progressed further, which explains why Ripple is pushing back and prefers not to settle quickly.

Possible Outcome for Ripple’s $125 Million Fine

When asked whether Ripple will attempt a cross appeal to reduce or eliminate the $125 million fine, Rispoli responded that they are likely already working on it. He stated that every lawsuit has two components: the law itself and the individuals who are involved.

According to Rispoli, there’s a possibility that the fine could be lowered to around $10 to $12 million, an amount which Rispoli said aligns with an initial proposal from Ripple.

He added that the SEC’s decision to drop its appeal signals that negotiations are already in progress. In exchange for Ripple’s cross appeal, the SEC might agree to reduce the fine or grant other concessions, such as lifting the injunctions on Ripple’s operations.

This would allow Ripple to proceed without any further regulatory constraints.

Looking Ahead

Rispoli further noted that Ripple might ultimately drop their cross appeal in exchange for a lower amount and a written agreement from the SEC confirming that Ripple’s activities are now compliant with the regulator’s rules.

He believes there’s a good chance of an agreement that paves the way for Ripple to continue. This includes plans for future capital raising and potentially even a future public offering.