The U.S. District Court for the Southern District of New York has officially ended the Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs. Judge Analisa Torres ordered Ripple to pay $125 million in civil penalties, concluding that XRP is not a security.
Judge Torres has also prohibited Ripple from breaking federal securities laws in the future. She clarified that while she isn’t saying Ripple has violated any laws after the SEC sued them, the company might “cross the line.”
She said, “The Court believes Ripple’s actions show a chance it will cross the line if it hasn’t already.” Because of this, the Court thinks there’s a good chance of future violations, so an injunction is necessary.
Ripple must file a registration statement if it wants to sell any securities in the future, as per the ruling. After the Ripple v SEC lawsuit ended, XRP’s value increased by more than 23% in a space of 24hrs.
The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) over the XRP cryptocurrency began in December 2020 when the SEC filed a lawsuit against Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen.
The SEC alleged that Ripple raised over $1.3 billion through an unregistered securities offering by selling XRP tokens. The regulator claimed that XRP should be classified as a security, subjecting Ripple to securities laws.
Ripple disputed the SEC’s claims, arguing that XRP is a currency with utility, not security. The company also accused the SEC of failing to provide fair notice that XRP could be considered a security.
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In March 2021, a judge ruled that XRP has currency value and utility, differentiating it from cryptocurrencies like Bitcoin and Ethereum. This was seen as a win for Ripple.
The case dragged on for over two years, with both sides scoring partial victories. In July 2023, a judge ruled that while XRP sales to institutional investors were securities transactions, XRP sales to the general public on exchanges were not.
The SEC dropped charges against Garlinghouse and Larsen in October 2023 but continued seeking remedies from Ripple. In May 2024, the SEC filed its final response, stating that Ripple’s gains were ill-gotten and that its arguments do not contradict the evidence against it.
At this final ruling, while the SEC had sought over $1 billion in penalties from Ripple, the court ultimately determined that a $125 million fine was appropriate given the circumstances of the case.
The decision is expected to help the entire crypto market, which needed a boost after the recent crash a few days ago which saw hundreds of millions of dollars lost.
Ripple CEO Brad Garlinghouse said he respects the court’s decision. He called it a win for Ripple, the crypto industry, and the rule of law. He also mentioned that the SEC’s challenges against the XRP community are over.
