The SEC Drops Appeal in Legal Case Involving Ripple
The U.S. Securities and Exchange Commission (SEC) has made the decision to drop its appeal in the ongoing legal case involving Ripple. This move comes after U.S. District Judge Analisa Torres’ ruling in 2023, which provided clarity on the classification of XRP as a security.
Judge Torres’ Ruling on XRP Sales
Judge Torres had previously determined that Ripple’s “programmatic sales” of XRP on secondary exchanges did not violate securities laws. However, the direct sale of XRP to institutional investors was found to be in violation of securities regulations. With the SEC choosing not to appeal, this ruling now serves as a significant precedent in the cryptocurrency space.
Settlement Details: SEC Returns $75 Million
As part of the settlement, the SEC has agreed to return $75 million of the $125 million fine initially imposed on Ripple by a New York judge in 2022. This leaves $50 million to settle the case.
Ripple’s Future Sales to Institutional Investors
Following the lifting of the SEC’s injunction, there has been speculation about Ripple’s ability to sell directly to institutional investors. While this may be possible, former SEC attorney Marc Fagel cautioned that the original ruling still stands, and any future sales conducted similarly to the previous institutional sales may pose legal challenges under Section 5 of the Securities Act.
Clarification from Former SEC Attorney
Addressing concerns about Ripple’s sales to institutional investors, Fagel emphasized that while the SEC will no longer actively pursue enforcement, potential legal issues could arise if Ripple resumes sales in a manner deemed illegal under the previous ruling.
Impact on Ripple’s On-Demand Liquidity Product
When asked about the impact on Ripple’s On-Demand Liquidity (ODL) product, Fagel noted that the ruling could alleviate some restrictions faced by Ripple in selling XRP. However, he warned that any future sales conducted in a similar manner to those deemed unlawful could still result in legal challenges, even though the SEC is no longer pursuing enforcement.