In December 2020, Ripple and its executives, Bradley Garlinghouse and Christian A. Larsen, faced a major lawsuit from the SEC. The lawsuit was about allegations of conducting an unregistered securities offering through XRP sales.
The SEC accused them of unlawfully selling securities, while Ripple argued that XRP is a currency, not a security. The case stirred debates in the crypto industry on the classification of cryptocurrencies.
The legal battle concluded on October 19, 2023, with Ripple’s leaders cleared of all SEC allegations. Ripple’s Chief Legal Officer, Stuart Alderoty, criticised the SEC for proposing a settlement three years prior. Alderoty accused the SEC of hypocrisy and overreach, emphasising Ripple’s commitment to proving XRP is not a security.
Ripple Prevails: Key Developments in SEC Legal Battle
On July 13, 2023, Judge Analisa Torres issued a mixed ruling in the SEC v. Ripple Labs case. The SEC and Ripple received partial victories and defeats. The SEC’s motion for summary judgment was granted for Institutional Sales but denied for other aspects.
Ripple’s motion found success for Programmatic Sales, Other Distributions, and sales by Larsen and Garlinghouse but was denied for Institutional Sales.
Notably, the SEC’s motion for summary judgment on the aiding and abetting claim against Larsen and Garlinghouse was denied.
On October 19, 2023, Ripple declared that CEO Brad Garlinghouse and Executive Chairman Chris Larsen were cleared of all SEC allegations, marking a significant setback for the agency.
Ripple’s Legal Chief Predicts 2024 Crypto Regulation
On December 15, 2023, Ripple’s Chief Legal Officer, Stuart Alderoty, predicted the trajectory of U.S. cryptocurrency regulation for 2024. He anticipated the resolution of Ripple’s legal battle with the SEC, continued SEC enforcement, potential judicial interventions, and legislative paralysis in the U.S. crypto sector.
On December 23, 2023, Alderoty revealed that the SEC proposed a settlement to Ripple three years prior, labelling XRP as a security. Ripple rejected the offer, maintaining that XRP is not a security and criticising the lack of a clear regulatory framework.
Alderoty accused the SEC of overreach and celebrated Ripple’s victory in exposing the SEC’s flawed approach.