The United States Securities and Exchange Commission (SEC) lawsuit against Ripple over the sales of XRP tokens has been one of high high-profile cryptocurrency cases. While the case commenced in 2020, the presence of Donald Trump as US president has seen the SEC ease its enforcement battle over the cryptocurrency space.
Since his emergence, the US SEC has withdrawn its lawsuits against top cryptocurrency companies like Binance, Kraken, Coinbase, Crypto.com, Robinhood Crypto, and many others. In March, as part of the relaxed approach from the US SEC, the regulator agreed to end the lawsuit against Ripple.
As part of the deal, the two parties agreed that Ripple should pay $50 million instead of the $125 million imposed on the cryptocurrency company. Shortly after reaching the agreement, XRP soared massively, confirming its position among the top-ranking cryptocurrencies.
Meanwhile, a recent ruling by US District Judge Analisa Torres in Manhattan has ruled against the agreement. The latest development has left crypto commentators and community members alike discussing what is next for XRP.
Recent timeline of the SEC vs Ripple lawsuit
In an unanticipated move, Judge Torres bemoaned how both the SEC and Ripple agreed to reduce the $125 million. Due to that, the Judge denied the joint motion submitted by Ripple and the SEC that aimed to reduce the cryptocurrency company’s fine.
Also, in reaction to the joint motion, Judge Torres kicked against the request to lift the permanent injunction on the institutional sales of XRP. According to the ruling, the Judge established that the two parties have yet to demonstrate the “extraordinary circumstances” needed to overturn the court’s final decision.
Furthermore, the hearing officer said both the regulator and Ripple cannot agree to shun a court’s final ruling that addresses the violations of a federal law. The ruling upholds the original judgement from August 2024.
Recall that last August, Judge Torres gave a final judgment that prevents Ripple from selling XRP to institutional investors in the US. She stated that the retail sales of XRP didn’t violate any securities law, a statement that validates the token as non-security.
In addition, the Jurist mandated Ripple to pay a fine of $125 million for selling XRP to institutional investors without registering. By holding the permanent injunction in the latest ruling, Judge Torres offered Ripple and the SEC two options.
The first option is for the two parties to withdraw their appeals, while the other suggests that they could proceed with them. These offers can compel the affected parties to have a rethink on their settlement strategy.
In either of the two ways, the original ruling of Judge Torres will stand. To an extent, commentators hold the opinion that the latest ruling by the hearing officer is important for regulatory clarity in the digital assets market.
What is next?
However, the ruling has drawn a swift response from Ripple’s legal team. In a post on X, the Chief Legal Officer of the crypto firm, Stuart Alderoty revealed that the company is considering its next legal steps already.
As per the statement, Alderoty said the ball is already back in the court of Ripple, which underlines the company’s control over the next line of action. He confirmed that the ruling didn’t change the legal status of XRP as a non-security.
The Chief Legal Officer said it will remain business as usual as the ruling doesn’t affect the company’s operations. Currently, Ripple has two options—dismiss its appeal that argues against the institutional sales or Ripple or continue with it.
Nevertheless, the ruling is a major setback for Ripple, but it will have minimal impact on XRP in the secondary market. The verdict will not affect the upcoming XRP ETF application as the SEC retains the authority to implement the injunction.
While revealing the ruling, Judge Torres conceded that unless the SEC decides to push forward, XRP’s market presence will remain unaffected. This further confirms that technically, the regulator has the legal premises to grant Ripple a waiver to some restrictions on the injunction.
Considering the improved relationship between the two parties of late, there is no clear indication that the SEC would pursue any enforcement action against Ripple.
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