In a significant update on the SEC versus Ripple saga, U.S. District Judge Analisa Torres recently finalized an order dismissing the SEC’s claims against Ripple executives Brad Garlinghouse and Chris Larsen. Signed on October 23, 2023, the order stressed that all allegations raised by the SEC against the Ripple leaders stand dismissed conclusively, without any associated costs.
Diving Deeper into the SEC’s Allegations
Shifting our focus back a few days, we recall the SEC hinting at its plan to retract the charges against the aforementioned executives. To provide a more precise context, on December 22, 2020, the SEC accused Garlinghouse and Larsen of aiding and abetting in raising capital for Ripple. This was purportedly done through the offer and sale of XRP to institutional stakeholders.
Furthermore, the SEC made a bold claim that both defendants personally conducted unregistered XRP sales, amassing nearly $600 million. The commission’s contention revolved around the premise that the duo had either overlooked registering their XRP offers and sales or had bypassed any potential exemptions, thereby contravening federal securities regulations.
Delving into the specifics, the allegations primarily addressed Ripple’s institutional XRP sales. It’s crucial to remember that the SEC divided Ripple’s XRP sales into three distinct types: institutional, programmatic, and other distributions.
The SEC adamantly believed these sales trespassed Section 5 of U.S. securities regulations. Yet, in a pivotal decision, Judge Torres discerned that Ripple’s only transgression was selling XRP to institutional investors while maintaining that programmatic sales and other distributions remained outside the purview of investment contracts.
Ripple Executives Dodge a Legal Bullet
Shifting gears to what lay ahead for Ripple’s executives, the court initially earmarked the institutional sales component of the lawsuit for a trial slated for the following year. Yet, unexpectedly, the SEC’s decision to retract charges against the Ripple brass means the trial is now off the table.
Speculations on the Horizon
As the dust settles on the dismissal, the crypto realm, particularly legal pundits, has plunged into fervent discussions about the SEC’s ensuing steps. Attorney Fred Rispoli, echoing the sentiments of many, predicts a plausible settlement in the cards for the SEC. Rispoli asserts that both parties might be ironing out the amount Ripple would have to shell out in a potential settlement.
On the other hand, the SEC hasn’t shut the door on appealing Judge Torres’ final judgment. Previous records indicate the SEC’s attempt to lodge an immediate appeal against the court’s July 13 summary judgment verdict. However, the court promptly rebuffed the SEC’s plea to greenlight an interlocutory appeal, directing the commission to bide its time until the judgment’s conclusion.
By dismissing the charges against Garlinghouse and Larsen, the SEC has paved a faster route to appeal. Nonetheless, the commission’s hands remain tied until the court formalizes the final judgment, set to follow the remedies phase.