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%, as investors welcomed the long-awaited resolution to the case that has clouded the token's future

The U.S. Securities and Exchange Commission (SEC) is officially withdrawing its lawsuit against blockchain behemoth Ripple and its top executives, marking the long-awaited closure of a case that spanned over four years.

The agency announced on Friday that it will be dropping its appeal of a July ruling by U.S. District Judge Analisa Torres, who partially sided with Ripple in the case.

Earlier this year, Judge Torres ruled that Ripple had indeed violated securities laws in its institutional sales of XRP. However, she also decided that Ripple’s programmatic sales to retail investors did not breach regulations.

This decision was seen as a partial win for Ripple, and the SEC later filed a notice of appeal against Judge Torres’ ruling.

But in a surprising turn of events, the SEC has now decided to abandon its appeal, effectively bringing the case to a close.

A Shift in Regulatory Approach

The SEC’s decision to drop the case comes amid broader shifts in the agency’s regulatory enforcement. In recent months, the Commission has also backed down from several high-profile cases.

Earlier this year, the SEC dropped its investigation into major cryptocurrency exchange Coinbase (NASDAQ:) and announced that it was shutting down its probe into crypto bank Kraken. Both cases had raised concerns among crypto investors.

The departure of former SEC Chair Gary Gensler and the nomination of Paul Atkins to lead the agency may have contributed to this shift in regulatory strategy.

Moreover, the SEC is currently seeking approval for several spot Bitcoin exchange-traded funds, a stark contrast to its previous stance against such products.

Ripple’s CEO, Brad Garlinghouse, has maintained that the lawsuit was never focused on investor protection but rather on stifling the cryptocurrency industry.

“This is 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 said.

The SEC sued cryptocurrency behemoth Ripple in December 2020 for allegedly raising $1.3 billion through the unregistered sale of its token, XRP, which the agency classified as a security.

The SEC alleged that Ripple notified investors about the risks involved in investing in XRP and provided them with an opportunity to withdraw their participation.

According to the SEC, this lack of registration with the agency made the token offering a violation of securities laws.

However, Judge Analisa Torres ruled in July that while Ripple had violated securities laws in its institutional sales, its programmatic sales to retail investors did not break regulations.

The judge’s decision was seen as a partial win for Ripple, and the SEC later filed a notice of appeal.

Despite Judge Torres’ ruling that the SEC had failed to prove its case, the agency announced on Friday that it would be dropping its appeal of the July ruling, effectively closing the case.

The SEC’s decision to abandon its appeal comes as a major development in the ongoing saga of cryptocurrency regulation.