SEC vs. Ripple Nears Settlement? Report Suggests a Resolution Is Closer Than Ever

The U.S. Securities and Exchange Commission (SEC) case against Ripple regarding the sale of XRP could be nearing its conclusion

A U.S. judge has ruled that portions of the Securities and Exchange Commission's case against Ripple will proceed to trial, setting the stage for a high-stakes legal battle.

The case, which began in December 2020, concerns the regulator's allegations that Ripple had sold unregistered securities in the form of XRP tokens. The SEC also seeks to impose a permanent injunction on Ripple's future sale of XRP to institutional investors.

However, Judge Analisa Torres has decided that certain claims in the SEC's case will not be going to trial. Specifically, Torres ruled in favor of Ripple regarding the SEC's claims for joint and several liability and failure to register a securities offering.

"Because the SEC's claims for joint and several liability and failure to register an offering will not be proceeding to trial, the court will not consider the parties' arguments on these issues in making its ruling on summary judgment," the order stated.

The case has major implications for the cryptocurrency industry, as it could set a precedent for how digital assets are regulated in the U.S.

Earlier this month, lawyer James Murphy, known as Metalawman on X, speculated that the delay may stem from Ripple's efforts to negotiate vacating Judge Torres's decision rather than the S.E.C. While the ruling largely favored XRP holders, he noted that findings of securities law violations and an injunction could hinder Ripple's future plans, such as an exempt securities offering or an I.P.O.

Murphy suggested the S.E.C. might have agreed to a settlement involving both parties dropping their appeals and Ripple paying a $125 million fine, but Ripple may be seeking better terms.

"My sense is that the S.E.C. went as low as they were willing to go with the $125 million fine and might be open to going lower if it got an RFEI [Request for Further Economic Impact], which is an indication that they want to go lower with the penalty. But they didn't want to go lower with the penalty if it implicated any indication that they were settling the case on less than favorable terms."

The S.E.C. sued Ripple in December 2020, alleging it had conducted an unregistered securities offering by selling XRP and that the company's CEO, Brad Garlinghouse, and former president, Peter Brightnell, aided in the scheme. The complaint, filed in a federal court in New York, also accused Ripple of failing to register as an exchange or clear house.

The case has become a pivotal legal battle in U.S. cryptocurrency regulation. However, the agency itself is undergoing substantial changes, with many crypto-related enforcement cases, such as those against Coinbase, Kraken, and Robinhood, being dropped.

The regulator's stance on crypto appears to be shifting following the departure of former S.E.C. Chair Gary Gensler.

Under the new leadership, the S.E.C. has established a task force to reassess its approach to crypto regulation. This shift may have influenced the negotiations between Ripple and the S.E.C. as they work toward a resolution.

This story originally appeared on Benzinga