The United States Securities and Exchange Commission (SEC), an authoritative body in charge of overseeing the financial markets, has chosen to drop its lawsuit against two prominent figures in the cryptocurrency world: Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. This remarkable development follows a pivotal legal ruling in July, one that could reshape the rules of engagement for digital currencies and their creators. This is a story of intrigue, legal twists, and the battle for clarity in the crypto wild west.
Welcome to the saga of the SEC’s decision to drop its lawsuit against Ripple executives, an event with profound implications for the world of cryptocurrency regulation.
Today was an even better day.
In all seriousness, Chris and I (in a case involving no claims of fraud or misrepresentations) were targeted by the SEC in a ruthless attempt to personally ruin us and the company so many have worked hard to build for over a… https://t.co/YsQxewFnj9
— Brad Garlinghouse (@bgarlinghouse) October 19, 2023
SEC drops lawsuit against Ripple executives
The United States Securities and Exchange Commission (SEC) decided to drop its lawsuit against Ripple executives, specifically Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. This decision came after a significant legal battle between the SEC and Ripple, marked by a pivotal ruling in July that favored Ripple’s position.
The lawsuit initially began in 2020 when the SEC accused Ripple of conducting an unauthorized digital asset securities offering and raising more than $1.3 billion through it. The SEC’s core argument was that the sale of Ripple’s XRP tokens to the public should be classified as securities, subject to regulatory oversight.
However, in July, a U.S. judge made a landmark ruling that contradicted the SEC’s position. This ruling stated that the sales of XRP to the general public did not meet the criteria for classification as securities. Essentially, the court held that XRP, under certain conditions, could be considered a digital currency or commodity rather than a security. This ruling was a significant departure from the SEC’s original stance and marked a turning point in the case.
Following this ruling, the SEC decided to seek a dismissal of the lawsuit against Ripple executives. This decision essentially means that the SEC is giving up its legal pursuit against Garlinghouse and Larsen in this matter. The dismissal of the lawsuit signifies a significant shift in the SEC’s position, indicating that the regulatory body is no longer pursuing its claims that Ripple’s actions constituted the sale of unregistered securities.
Ripple’s Chief Legal Officer, Stuart Alderoty, described the SEC’s move to drop the lawsuit as a “surrender,” emphasizing that it was not a negotiated settlement. This change in the SEC’s approach has broader implications for the regulatory framework surrounding cryptocurrencies in the United States. It has been perceived as a win for Ripple and a signal that legal and regulatory dynamics in the cryptocurrency industry are continually evolving.
In summary, the SEC’s decision to drop the lawsuit against Ripple executives stems from a key court ruling in July that favored Ripple’s position, specifically regarding the classification of XRP sales. This decision signifies a significant change in the SEC’s approach to regulating Ripple and the broader cryptocurrency market. It also highlights the evolving nature of cryptocurrency regulations and their impact on the industry.
Featured image credit: Ripple