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In a landmark decision, the U.S. Securities and Exchange Commission (SEC) has cleared Ripple’s CEO, Brad Garlinghouse, and Executive Chairman, Chris Larsen, of all ‘baseless’ allegations in a long-standing securities violation case. This development marks a significant victory for Ripple after enduring nearly three years of intense regulatory scrutiny.
The SEC’s decision to dismiss charges signifies a pivotal moment in the ongoing dispute between the cryptocurrency industry and the regulatory authority. This legal battle has been closely watched as it sets a precedent in defining what constitutes security in digital assets.
Ripple Triumphs in SEC Legal Battle
The allegations against Garlinghouse and Larsen, initially filed in December 2020, asserted that the digital asset XRP distributions should have been registered as a security. The court’s ruling in July 2023 declared that XRP itself is not a security, a verdict that gave Ripple a significant victory.
The SEC and Ripple have expressed their intention to meet and discuss a potential briefing schedule regarding the pending issue in the case, specifically concerning the appropriate remedies for Ripple’s Section 5 violations related to its Institutional Sales of XRP. Ripple responded to the filing, describing the original pursuit by the SEC as “absurd theatrics” and characterizing this development as a “surrender.”
Brad Garlinghouse has expressed relief after nearly three years of battling baseless allegations. He criticized the SEC for seemingly diverting its attention from criminal activities on offshore exchanges to target individuals and a company working towards building a regulated business within the United States.
Simultaneously, Executive Chairman Chris Larsen expressed his sense of vindication, emphasizing the personal toll this lawsuit took on both individuals. He raised pertinent questions about the origin and motivation behind the SEC’s legal pursuit, highlighting what he perceived as an abuse of power.
Ripple’s Impact on the Crypto Industry
Despite this victory, Ripple’s pursuit of sound crypto regulation within the United States is far from over. The company continues to actively dialogue with policymakers and regulators worldwide, aiming to foster responsible innovation within the digital assets industry.
This legal development has implications not only for Ripple but for the broader cryptocurrency industry as well. Under Chair Gary Gensler’s leadership, the SEC has been striving to establish a clear regulatory framework for cryptocurrencies. However, this case demonstrates the complexity and challenges in classifying various digital assets as securities, a matter that is far from settled.
The SEC has voluntarily dismissed the case against #Ripple senior execs. This means they can proceed to appeal the Ripple decision much sooner–otherwise they would have had to wait until the conclusion of that trial in the late spring.
— Katherine Kirkpatrick (@kkirkbos) October 19, 2023
Meanwhile, Katherine Kirkpatrick, the chief legal officer for Cboe Digital, has speculated in a post on X (formerly Twitter) that the SEC may have dismissed the cases against the individual defendants as a legal tactic. She suggested that this move allows them to appeal the Ripple decision much sooner, as opposed to waiting until the conclusion of the trial, which would have been in late spring.