The protracted legal battle between Ripple
and the United States Securities and Exchange Commission (SEC) has reached a settlement. Ripple has agreed to pay a penalty of $50 million over allegations of selling unregistered securities. This amount is significantly lower than the initially requested $2 billion, as well as last year’s $125 million settlement. The lawsuit initiated in 2020 focused on whether XRP sales violated securities laws. In an interim ruling in 2023, the court determined that corporate sales constituted a violation, while individual transactions were outside this scope.
The Beginning and Developments of the Case
The case intensified in late 2020 when the SEC accused Ripple of selling XRP as unregistered securities. The SEC argued that Ripple should have registered the packages offered to institutional investors. Ripple, however, consistently maintained that trades on individual platforms did not fit the definition of securities transactions.
By 2023, the interim ruling clarified the charges against corporate transactions while showing leeway towards individual sales. Following this decision, hints of policy easing during the Trump administration led to extended and discreet negotiations between the parties. Recent diplomatic efforts eventually paved the way for a settlement.
Market Reaction to XRP and Criticism
Upon news of the settlement, XRP experienced an immediate 8.7% increase in value within the crypto market. Investors’ expectations leaned towards a reduction in regulatory uncertainties. However, experts are skeptical about whether the low penalty will set a precedent in the industry. It remains to be seen if the price movement indicates short-term relief or the start of a new trend.
The SEC also witnessed differing opinions internally. Member Caroline A. Crenshaw described the settlement as a decision that compromises investor protection. Crenshaw stated, “The agency’s oversight program has been weakened; this leaves cryptocurrency users vulnerable.” Ripple’s management noted that the process has not fully concluded, with several aspects still under discussion.