Ripple Settles With SEC: XRP to Pay $50M as Part of a Historic Settlement

Ripple Labs has nearly closed its long-standing legal battle with the U.S. Securities and Exchange Commission (SEC).

The U.S. Securities and Exchange Commission (SEC) has agreed to settle its lawsuit against Ripple Labs, marking a significant development in the cryptocurrency industry.

The SEC sued Ripple in December 2020, alleging that the company raised $1.3 billion through an unregistered offering of XRP. The agency also sued Ripple CEO Brad Garlinghouse and Chairman Chris Larsen for personally misleading investors about XRP’s true nature.

However, in a surprising move, the SEC will now accept a settlement that will see Ripple pay a reduced fine of $50 million.

Initially, Ripple was ordered to pay $125 million, but $75 million will be returned to the company as part of the new deal.

What Happened to Bring About This Settlement?

According to a recent statement by the SEC, the agency and Ripple will jointly ask the court to terminate the previous injunction and close out all avenues of appeal. This effectively brings an urgent end to their legal dispute.

The SEC will also officially acknowledge that XRP is not a security on public exchanges in its statement announcing the settlement. This is a crucial factor, as it has implications for the status of other cryptocurrencies sold on exchanges.

In its press release, the SEC was keen to point out that it is settling the case but this does not indicate it was wrong in its legal claims. Instead, the move signals a strategic shift in how the SEC will be approaching crypto regulation going forward.

The agency further clarified that this settlement applies exclusively to Ripple and will not impact other crypto-related enforcement actions.

Crucial Changes in US Administration's Crypto Stance

The Biden administration’s stance on crypto has evolved from "destructive" to "constructive," notes Italian crypto expert Fabio Zuccara. He highlighted that multiple crypto lawsuits have been dropped recently, signaling a more balanced regulatory direction.

Among the recent cases dropped by the SEC include those against hedge fund manager Michael Novogratz’s Galaxy Digital and crypto trading firm BeQuant.

Earlier this year, the SEC also dropped its case against hedge fund manager Ian Levin, who was accused of defrauding investors in a cryptocurrency hedge fund.

Earlier this year, the SEC dropped its lawsuit against hedge fund manager Michael Novograt (0email protected)gratz's Galaxy Digital. The agency had sued Galaxy Digital in 2021, alleging that the firm sold unregistered securities to investors. However, the SEC agreed to drop the lawsuit after Galaxy Digital agreed to pay a $12 million penalty.

The SEC also recently dropped its lawsuit against crypto trading firm BeQuant. The agency sued BeQuant in 2020, alleging that the firm sold unregistered securities to investors and defrauded them. BeQuant agreed to pay a $40 million penalty to settle the SEC's claims.

These developments suggest that the SEC may be becoming more open to reaching settlements with companies in crypto cases. This could lead to a more rapid resolution of some of the pending crypto lawsuits, such as the one against crypto exchange Coinbase (NASDAQ:COIN).

The SEC is currently suing Coinbase for allegedly selling unregistered securities to investors. Coinbase has denied any wrongdoing and is vigorously contesting the SEC's claims.

The SEC is also suing crypto firm BlockFi for allegedly selling unregistered securities to investors. BlockFi has agreed to pay a $50 million penalty to settle the SEC's claims.

The SEC's increased focus on cryptocurrency has led to several high-profile lawsuits in recent years. In addition to the cases mentioned above, the SEC has sued several other crypto firms, including Telegram and FTX.

The SEC's actions have had a significant impact on the cryptocurrency industry. The agency's lawsuits have led to several crypto firms delaying or cancelling their public offerings.

The SEC's stance on crypto has been a subject of debate for some time. Some critics argue that the agency is too slow to approve new products and that its actions are stifling innovation in the industry. Others argue that the SEC is acting in the best interests of investors by ensuring that crypto firms comply with the law.

As the SEC continues to process its caseload and adjust its strategy, the coming months will be crucial in determining the long-term trajectory of crypto regulation in the U.S.