According to Fox Business reporter Eleanor Terrett, the U.S. Securities and Exchange Commission (SEC) persists in its legal tussle with Ripple despite the recent dismissal of charges against top executives. This development counters widespread speculation within the crypto community that the dismissal would expedite the case’s resolution.
The SEC’s decision to drop allegations against Ripple executives Bradley Garlinghouse and Chris Larsen marked a significant turn. However, Terrett highlights that the agency, steered by Gary Gensler, remains unwavering in its stance. Her report suggests the SEC continues to classify all sales and offers of XRP as securities, relying on insights from sources within the commission.
The conflict dates back to December 2020 when the SEC accused Ripple and its executives of conducting unregistered securities offerings. This legal standoff revolved around the nature of XRP sales, which the SEC contends fall under the regulatory scope of investment contracts. Ripple’s sales strategies were segmented into institutional sales, deals on digital exchanges, and other distributions, attracting scrutiny from the regulatory body.
A pivotal moment they occurred during a July 13 summary judgment hearing. Judge Analisa Torres ruled that only Ripple’s direct sales of XRP to institutional clients violated securities laws. The court contradicted the SEC’s position by excluding Ripple’s automated sales and other distributions from the classification of investment contracts.
Consequently, discontent with the partial defeat, the SEC sought an interlocutory appeal. The court, however, deferred this action, advising the commission to wait for a comprehensive resolution. With all charges against the executives now withdrawn, the case advances to the remedies phase, setting the stage for a conclusive verdict.
This progression brings the possibility of another judicial encounter. The SEC could venture into the Second Circuit appeals, as indicated by its reluctance to forsake the broader aspects of its case. Such a move could also be a strategic play to negotiate a substantial settlement from Ripple, exploiting other facets of the lawsuit.
Moreover, the persistent legal pressure from the SEC underscores the agency’s commitment to maintaining strict regulatory standards in the burgeoning cryptocurrency space. It also serves as a crucial reminder for industry players about the importance of compliance and the potential repercussions of oversight.