Ripple Labs May Soon Conclude Its Prolonged Legal Battle with the SEC

The prolonged legal battle between the SEC and Ripple Labs, initiated in December 2020 over the alleged $1.3 billion unregistered XRP sale, may soon conclude

The protracted legal battle between the Securities and Exchange Commission (SEC) and Ripple Labs, which commenced in December 2020, may soon reach its conclusion, according to a report by Fox Business.

The crux of the case centers on the alleged $1.3 billion unregistered sale of XRP (CRYPTO: XRP) and whether the cryptocurrency's utility and trading status align more closely with a commodity, similar to Ethereum (CRYPTO: ETH), or a security.

This comparison has become a pivotal factor in determining the case's outcome, especially as the SEC transitions under new leadership and is currently reassessing its stance on crypto.

Following administrative law judge Analisa Torres's partial ruling in July, which found that Ripple's programmatic sales of XRP were not subject to registration requirements due to the blind bid process used in such transactions, the case has taken a significant turn.

However, the judge also ruled that institutional sales of XRP were indeed securities, and the agency had failed to prove that Ripple had intent to defraud investors.

After August saw a district court impose a $125 million fine and an injunction on Ripple, halting the firm's ability to sell institutional tranches of XRP, a new development has unfolded.

According to Fox Business senior correspondent Charles Gasparino on X, the instance of Ethereum is crucial in the ongoing discussions.

"I am told the @ethereum example is key. Both had 'ICOs' to fund the platforms. But while they were raising money, in the case of ETH, it became a commodity," Gasparino explained further.

He added, "Those facts are not in dispute. Yet, no one went after ETH. But Ripple is being sued and they may now be settling. But if they are, it will be on terms favorable to them."

Gasperino stated that the SEC is now examining whether XRP can be classified in a similar manner, considering its sustained trading activity and utility.

Further reporting by Fox Business's Eleanor Terrett sheds light on the delay in finalizing the case. Terrett noted that Ripple's legal team is pushing for better terms following the August ruling, which imposed a $125 million fine and an injunction on institutional XRP sales.

"The argument, I'm told, is that if the new SEC leadership is wiping the enforcement slate clean for all previously-targeted crypto firms, why should Ripple still be penalized?" Terrett posted on X.

Moreover, Terrett pointed out that the agency has dropped cases against Coinbase (NASDAQ:COIN), OpenSea, Robinhood (NASDAQ:HOOD) and UniSwap (CRYPTO: UNI) and is now forming a task force to decide which crypto assets are securities, a task that will be headed by Commissioner Hester Peirce, also known as "Crypto Mom."

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The lawsuit's trajectory has shifted notably after Judge Analisa Torres made her partial ruling in July.

Her decision focused on the nature of Ripple's token offerings, ultimately finding that the programmatic sales were not sold in violation of Section 5 of the Securities Act.

This ruling was a setback for the SEC, which has been waging a broad campaign to classify most cryptocurrencies as securities.

However, the judge did decide in favor of the SEC on the final point of contention: that the agency's actions were not "arbitrary, capricious, an abuse of discretion, or otherwise unlawful.”

The case has taken a new turn with the recent administrative law judge's ruling.