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The US Securities and Exchange Commission (SEC) has dropped charges against two Ripple Labs executives in a lawsuit accusing the company of violating US securities laws. This development was made clear by a court case in New York.
SEC drops charges against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen over their involvement in cryptocurrency sales XRP, which a judge deemed an unregistered offering of securities. In the original suit from December 2020, the SEC alleged that Ripple illegally raised over $1.3 billion by selling XRP in an unregistered securities offering.
US District Judge Analiza Torres in Manhattan handed Ripple a partial victory in July, confirming that sales of XRP on public exchanges do not qualify as unregistered securities offerings. Torres also denied the SEC's request for an appeal. However, it ruled partially in favor of the SEC, saying the company's $728.9 million worth of XRP sales to sophisticated buyers violated the law.
Garlinghouse and Larsen, vocal critics of the SEC throughout the case, accused the agency of a political agenda. They argued that the SEC should focus on catching criminals in offshore exchanges rather than targeting responsible participants.
The SEC's case against Garlinghouse and Larsen was set for a jury trial. The next step, as outlined in the SEC filings, involves presenting arguments from both sides regarding the appropriate punishment for Ripple.
The development marks a rare setback for the SEC in its efforts to regulate the industry. Under the leadership of SEC Chairman Gary Gensler, the agency took legal action against Binance, the world's largest crypto exchange, and Coinbase, the largest US crypto exchange.