After More Than Four Years of Legal Battles, the SEC Officially Drops Its Lawsuit Against Ripple

After more than four years of legal battles, the U.S. Securities and Exchange Commission (SEC) is officially withdrawing its lawsuit against Ripple. The news has sent XRP soaring over 10%

The U.S. Securities and Exchange Commission (SEC) is officially withdrawing its lawsuit against Ripple after more than four years of legal battles. The news has sent XRP soaring over 10%.

At the time of writing (8:40 ET), XRP was trading at $2.53, according to CoinMarketCap data. This represents a 12% and 18% increase in the daily and weekly charts, respectively.

The Lawsuit That Shook The Crypto Industry

The SEC initially sued Ripple in December 2020, alleging the company had raised $1.3 billion through the unregistered sale of XRP, which the agency classified as a security.

A major turning point came in 2023 when U.S. Judge Analisa Torres ruled that while Ripple had violated securities laws in institutional sales, its programmatic sales to retail investors did not break regulations. The decision was seen as a partial win for Ripple, leading the SEC to file a notice of appeal.

However, the latest development confirms the agency is abandoning its appeal, effectively bringing the case to a close.

The SEC's decision to drop the case also comes amid broader shifts in regulatory enforcement. In recent months, the Commission has also backed down from investigations into major crypto companies, including Coinbase and Kraken.

The departure of former SEC Chair Gary Gensler and the nomination of Paul Atkins to lead the agency under the Trump administration may have played a role in the SEC's retreat.

XRP price soars on the daily chart, source: CoinMarketCap

Earlier this year, Gensler faced criticism for his handling of the crypto market, with some accusing him of being too slow to provide clear regulatory guidance.

The case against Ripple had become a key battleground in the broader cryptocurrency space, with many in the industry following the developments closely. A victory for the SEC could have had far-reaching implications for other crypto projects.

Ripple CEO Brad Garlinghouse has termed the latest development as a "resounding victory," highlighting a turning point for the cryptocurrency industry.

"This is it – the moment we've been waiting for. The SEC will drop its appeal – a resounding victory for Ripple, for crypto, every way you look at it. The future is bright. Let's build," Garlinghouse commented on X.

The lawsuit had been a point of contention since its onset, with many arguing that the SEC's actions were stifling innovation in the crypto sector.

The case arose after the SEC began investigating Ripple in 2019, eventually filing a lawsuit in December 2020. The agency claimed that Ripple had sold XRP to raise billions of dollars without registering the offerings with the SEC, as required for any security.

The SEC's complaint also focused on the nature of XRP, with the agency maintaining that the token should be classified as a security. This classification would subject XRP to SEC regulation and require the company to comply with specific disclosure and registration obligations.

Throughout the case, Ripple maintained that XRP was not a security and that the SEC's actions were an overreach of its authority. The company argued that its token sales were programmatic and open to the public, characteristics that, according to Ripple, disqualified XRP from being classified as a security.

The case unfolded over several years, with both parties presenting their arguments in court and engaging in legal procedures. Finally, in 2023, U.S. Judge Analisa Torres ruled that while Ripple had violated securities laws in its institutional sales, its programmatic sales to retail investors did not break regulations.

The decision was seen as a partial win for Ripple, leading the SEC to file a notice of appeal. However, the latest development confirms the agency is abandoning its appeal, effectively bringing the case to a close.

The SEC's decision to drop the case also comes amid broader shifts in regulatory enforcement. In recent months, the Commission has also backed down from investigations into major crypto companies, such as Coinbase and Kraken, and dropped cases against hedge fund manager Mathew Martoma and former Credit Suisse Group AG executives.

Moreover, the departure of former SEC Chair Gary Gensler and the nomination of Paul Atkins to lead the agency under the Trump administration may have played a role in the SEC's retreat.

Earlier this year, Gensler faced criticism for his handling of the crypto market, with some, including former SEC commissioner Paul McWilliams, accusing him of being too slow to provide clear regulatory guidance.

The case against Ripple had become a key battleground in the broader cryptocurrency space, with many in the industry following the developments closely. A victory for the SEC could have had far-reaching implications for other crypto projects and the market in general.

The ruling by Judge Torres, especially concerning the programmatic sales, could influence how future cases regarding crypto are handled in the U.S.

As the dust settles on this legal battle, the cryptocurrency industry will be watching closely to see what the implications are for