The resolution of the case is far from resolving all contradictions
Author:FinTax Research
Cover:Ripple
[The rest of the translation continues in the same manner, maintaining the structure and translating the text to English while preserving special terms as specified.] On March 19, 2025, Ripple CEO Brad Garlinghouse announced on the X platform that the U.S. Securities and Exchange Commission (SEC) will drop its appeal against Ripple. In July 2023, the court ruled that XRP itself does not constitute a security, but some direct sales to institutional investors may have violated securities laws. Subsequently, the SEC attempted to appeal multiple times but was repeatedly rejected by the court. If the SEC ultimately decides to abandon its appeal, it will completely end this four-and-a-half-year legal battle. This victory is not only a milestone for Ripple but also a symbolic event of the U.S. crypto industry challenging SEC regulation. [The rest of the document continues to be translated in a similar manner.]Stage Three: SEC Appeal and Ruling Consolidation
Dissatisfied with the "exoneration" of employee compensation, developer incentives, and programmatic market sales, the SEC filed an interlocutory appeal in October 2023, citing Judge Jed Rakoff's ruling in the SEC v. Terraform Labs case, which was contrary to Judge Torres' decision (determining that the stablecoin UST sold on exchanges constitutes securities), in an attempt to overturn part of the district court's ruling.
On October 3, 2024, Judge Analisa Torres rejected the SEC's appeal motion, clearly stating that her ruling does not conflict with the Terraform Labs case, maintaining the conclusion of exemption for programmatic sales and employee compensation and developer incentives. In the reasoning of the ruling, Analisa Torres clarified the lack of conflict between the two cases through two points: first, Ripple's profit promises were only specifically transmitted to institutional investors and not spread in the open market, while Terraform claimed to all retail and institutional investors that "all purchased funds will be used to create profits"; second, there is clear evidence in the Ripple case that retail investors cannot reasonably expect the company to generate profits for them, which forms an essential difference from the comprehensive promises in the Terraform case. That month, the SEC submitted a formal notice of appeal to the Federal Second Circuit Court, requesting a comprehensive review of the XRP securities classification standard, and subsequently withdrew the appeal in March 2025, at the time of the news release.
FinTax Brief Commentary
The SEC's abandonment of the appeal against Ripple is another representative event of the changing attitude towards crypto regulation in the United States after Trump's return to the White House. The judicial reasoning of the presiding judge will also have a demonstrative effect on future judicial rulings in the United States. In the 2023 ruling, Judge Analisa Torres proposed the "scenario segmentation" principle, binding the legal nature of cryptocurrencies to their sales scenarios - institutional sales were deemed securities due to clear profit promises, while anonymous trades in the open market were exempted due to the lack of "reliance on others' efforts". This scenario-based distinction denies the SEC's one-size-fits-all approach based on technical attributes, instead focusing on specific legal details such as contractual relationships in the transaction chain. From another perspective, the SEC's appeal process lasting over two years was essentially a defense of its regulatory authority, and this withdrawal precisely proves that the SEC's one-size-fits-all enforcement logic is increasingly difficult to sustain under the triple pressure of judicial, political, and market forces.
Behind the compromise lies the result of political bargaining and market forces. Ripple actively participated in political lobbying during this presidential election. Political Action Committees (PAC) and Super PACs are the core mechanisms in the US political system connecting businesses and power, allowing companies to influence policy-making through donations. Ripple donated over $70 million to a Republican Super PAC and $5 million to Trump's inauguration fund, which would inevitably influence the Trump administration's lenient crypto policy and weaken the SEC's enforcement motivation. The presidential nomination of Paul Atkins, who supports crypto assets, to become SEC chairman is a concentrated manifestation of this political influence. Meanwhile, market choices accelerated regulatory concession. Bitnomial launched XRP futures regulated by CFTC, and Coinbase reopened XRP trading in 2024. Cryptocurrencies are now widely used in life scenarios, and the SEC's previous regulatory policies have fallen behind the times.
However, the case's conclusion is far from resolving all contradictions. On one hand, the $125 million fine may still be appealed by Ripple; on the other hand, while the securities classification supported by the SEC in the Terraform Labs case was overturned by this "scenario-based distinction" ruling, its binding force in other cases cannot be ruled out. If other circuit courts make similar rulings in similar cases, XRP's compliance status might be destabilized again. Overall, although judicial differences and political bargaining still exist in the short term, the SEC's withdrawal has clearly signaled that market evolution and technological innovation are forcing regulatory model upgrades. If the United States can seize this opportunity to reconstruct its institutional advantages, solidifying the "scenario-based regulation" precedent into legislative principles and establishing a collaborative mechanism between the SEC and CFTC, it may further establish its centralized leadership in the decentralization wave.
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