The XRP community is doing a victory dance this December as the Ripple lawsuit filed by the SEC about five years ago totally becomes a thing of history.
On Dec. 22, 2020, the Securities and Exchange Commission (SEC) filed a high-profile enforcement action against Ripple, alleging that it broke securities laws by selling XRP without registering it as a security.
The case evolved into one of the most-watched legal cases in crypto as it rallied the greater crypto industry around XRP. More than a dozen advocacy groups, including the Chamber of Digital Commerce and the Blockchain Association, wrote to U.S. District Judge Analisa Torres in support of Ripple’s position.
Ripple, XRP won
The SEC had contended XRP was a security under the so-called Howey test, named after a 1946 Supreme Court ruling. Ripple contended that XRP did not meet that test because sales took place in the secondary market and there was no pooling of profits.
In July 2023, Judge Torres ruled that XRP was not a security in and of itself but found certain institutional sales to have violated securities law; the decision was widely viewed by the industry as a victory and a check on the SEC’s authority.
The SEC asked Judge Torres to order Ripple to pay more than $876 million in disgorgement and more than $198 million in interest, along with an $876 million civil penalty.
In a win for Ripple, Judge Torres denied the SEC’s bid for Ripple to disgorge profits from its sales on the basis that the case “does not involve allegations of fraud, misappropriation or other more culpable conduct.” Ripple was asked to pay $125 million in civil penalties.
Fast forward to October this year, in a move that put a final closure to the case, both parties dismissed their appeals in the U.S. Court of Appeals for the Second Circuit. The stipulation also resolved the civil enforcement actions against Ripple CEO Brad Garlinghouse and its chairman Chris Larsen. This effectively ended one of the cryptocurrency industry’s highest-profile lawsuits.
At the time of writing, XRP was trading at $2.04, up 827% from the $0.22 low reached in December 2020 when the SEC lawsuit was filed.
