In a significant development in the ongoing lawsuit between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), all charges against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen have been dismissed. Stuart Alderoty, Ripple’s Chief Legal Officer, termed this move by the SEC as not just a settlement but a “surrender.” The SEC had previously accused the Ripple executives of being personally liable for the sale of illegal securities in the form of Ripple’s XRP token.
However, this turn of events doesn’t mark the end of the road for the legal dispute between the two parties. According to a filing on Thursday, the SEC stated, “The SEC and Ripple intend to meet and confer on a potential briefing schedule with respect to the pending issue in the case—what remedies are proper against Ripple for its Section 5 violations with respect to its Institutional Sales of XRP.”
Ongoing issues with Ripple’s sales practices
Judge Analisa Torres, who presided over the case, previously ruled that some of Ripple’s XRP sales did not violate securities laws. These sales were conducted through a blind bid process. Despite this partial win for the SEC, the agency is now focusing its legal efforts on determining suitable remedies for other Ripple sales considered violations under Section 5. Both parties have agreed to propose a briefing schedule on the matter by November 9, 2023, should they be unable to reach a compromise.
The SEC’s earlier efforts to slow down the trial met with failure. The agency was denied its request for an interlocutory appeal and also failed to secure a stay of trial. Therefore, although the personal charges against Garlinghouse and Larsen have been dropped, Ripple Labs remains a named defendant in the case and will likely continue to face legal scrutiny.
Ripple executives speak out
Brad Garlinghouse and Chris Larsen expressed relief over the SEC’s decision to drop the charges. “Today was an even better day,” remarked Garlinghouse, emphasizing the personal toll the case had taken on them. Larsen, too, criticized the SEC’s attempt to “abuse the rules to advance a political agenda to destroy cryptocurrencies in America.”
Moreover, the SEC has come under fire for what some see as inconsistent application of securities laws, especially concerning cryptocurrencies. Ripple’s executives questioned the agency’s focus on their company while allegedly neglecting consumer protection concerns.
While the dismissal of charges against Ripple’s executives offers some degree of closure, it opens up new questions about the SEC’s future strategy in regulating cryptocurrencies. Additionally, the move draws attention to how the regulatory body will handle alleged Section 5 violations by Ripple Labs in its institutional sales of XRP.
The continued legal entanglements suggest that although Ripple’s executives are off the hook for now, challenges for the cryptocurrency company are far from over. The SEC’s pivot towards Ripple’s sales practices indicates a recalibration in their legal approach, hinting at the intricate battles ahead.
