A few days ago, Ripple scored a significant victory in its three-year legal battle with the U.S. Securities and Exchange Commission (SEC), leading to a 26% surge in the price of XRP.
The judge ruled that Ripple’s sales of XRP to retail investors did not violate federal securities laws, and significantly reduced the SEC’s requested penalty by about 94%, from $2 billion to $125.035 million.
It’s worth noting that since the SEC filed a lawsuit against Ripple in December 2020, the two sides have been locked in a prolonged legal struggle. Ripple has achieved several interim successes through legal means, including a court ruling that XRP itself is not a security.
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The History of the Ripple and SEC Conflict
Ripple's story began in 2004 when Canadian programmer Ryan Fugger launched RipplePay, a peer-to-peer payment system that predated blockchain technology by several years.
In 2011, cryptographer David Schwartz, Mt. Gox founder Jed McCaleb, and video game designer Arthur Britto collaborated to develop a more efficient system that didn’t require proof-of-work mining. This system eventually evolved into the XRP Ledger, leading to the founding of Ripple Labs.
Over time, Ripple gradually attracted numerous investors and partners. In 2013, Ripple secured $3.5 million in funding, and in 2014, it established partnerships with CBW Bank and Cross River Bank. By 2015, Ripple had hired former Yahoo COO Brad Garlinghouse to take on a role in the payment network and began promoting the XRP token.
On December 21, 2020, the SEC filed a lawsuit against Ripple Labs and its executives, accusing them of conducting an unregistered securities offering. The SEC claimed that Ripple's actions of raising funds through the sale of its XRP tokens violated federal securities laws. Following this announcement, the price of XRP dropped from $0.58 to $0.21, and several cryptocurrency exchanges delisted XRP. Ripple CEO Brad Garlinghouse denied the SEC's allegations and stated that the company would fight the charges in court.
Since the SEC's lawsuit, both parties have been engaged in a prolonged legal battle. Ripple has continuously sought legal support and evidence to prove that XRP should not be classified as a security.
Key Milestones:
1. March 2021: Judge Netburn's Ruling
In March 2021, Judge Sarah Netburn ruled that XRP possesses both value and utility, distinguishing it from other cryptocurrencies like Bitcoin. This ruling was significant as it highlighted the legal differences among cryptocurrencies, paving the way for future classification and enforcement actions.
2. May 2021: Ripple’s Counterattack
Ripple aggressively countered through legal measures, arguing that the SEC failed to provide clear guidance, making it impossible for the company to comply with its requirements. Ripple's legal team emphasized the inconsistency and lack of transparency in the SEC's approach to cryptocurrency regulation.
3. July 2023: Partial Support from Judge Torres
In July 2023, Judge Analisa Torres partially ruled in favor of Ripple, determining that XRP itself is not a security. This decision marked a significant legal victory for Ripple, leading to a substantial increase in XRP's price. However, the SEC did not relent and continued to pursue legal actions against Ripple.
Additional Points:
1. Coinbase Delisting XRP
Following the SEC's lawsuit against Ripple, cryptocurrency exchange Coinbase promptly delisted XRP. This move had a significant impact on the XRP market but also spurred Ripple to intensify its legal battle.
2. Ripple’s Legal Expenses
Ripple has spent over $200 million in legal fees defending itself against the SEC's charges. This demonstrates Ripple's determination and financial backing in its fight against the SEC, underscoring the importance and complexity of the case.
3. International Cooperation and Expansion
Despite the legal challenges, Ripple has continued to pursue its international expansion strategy, forging partnerships with multiple financial institutions and partners. This indicates that Ripple remains committed to advancing its technology and market presence beyond the courtroom.
Throughout the legal battle, Ripple has consistently secured interim victories, not only boosting market confidence in XRP but also providing valuable legal precedents for the entire crypto industry.
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Latest Settlement Developments
In March 2024, the SEC planned to request the judge to impose a $2 billion fine on Ripple Labs.
Ripple’s Chief Legal Officer, Stuart Alderoty, stated that Ripple’s response would be submitted the following month. In May, the SEC, in a revised remedial briefing, described Ripple’s proposed stablecoin as an "unregistered crypto asset" and persisted in seeking nearly $2 billion in penalties against Ripple.
However, the court ultimately ruled that the SEC's fine request was excessive, reducing it by approximately 94% to just $125 million. This ruling was a significant victory for both Ripple and the broader crypto industry. Following the announcement, XRP's price surged, reaching a peak of $0.6434, marking a 19.7% increase within 24 hours.
Analysts noted that while there might be technical corrections in the future, this ruling has significantly bolstered market confidence, and XRP's long-term outlook remains promising.
Conclusion
The ongoing legal dispute between Ripple and the SEC and the latest settlement developments have not only influenced XRP's market performance but have also had a profound impact on the entire crypto industry. Ripple has demonstrated strong resilience in this legal battle and has achieved notable interim victories.
Looking ahead, as the regulatory environment becomes clearer, the crypto industry is poised for further growth opportunities. Investors should closely monitor market trends to seize investment opportunities and achieve wealth appreciation.
