The US Securities and Exchange Commission (SEC) announced a settlement with Ripple Labs Inc. and executives Bradley Garlinghouse and Christian A. Larsen. With this, the regulatory authority officially closes the years-long legal dispute with the XRP founding team.
This settlement ends the legal battle that had been ongoing since December 2020. As part of the agreement, Ripple will pay a fine of USD 50 million, without admitting any wrongdoing, according to an SEC statement.
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Background of the SEC lawsuit
The SEC had accused Ripple and its executives of selling XRP as an unregistered security, in violation of US securities laws. The lawsuit was of major significance as it had far-reaching implications for the regulation of cryptocurrencies in the United States. A particularly controversial issue was whether XRP should be classified as a security, which would have had consequences for other cryptocurrencies.
As part of the settlement, Ripple agreed to pay a fine of USD 50 million. Neither Ripple nor the two executives, Garlinghouse and Larsen, admitted to any wrongdoing. The SEC stated that the settlement was in the best interest of investors and the financial markets. It emphasized that the agreement does not set a precedent for other crypto companies and that each case would be assessed individually.
The SEC also stressed that the settlement should not be interpreted as a confirmation of the legality of XRP or other cryptocurrencies. The agency reserves the right to take action against companies that violate securities laws.
Impact on the industry
The settlement between the SEC and Ripple is seen as a significant step in the regulation of cryptocurrencies in the US. It could serve as a model for future cases and potentially lead to a clearer legal classification of cryptocurrencies. However, it remains to be seen how this settlement will affect ongoing and future proceedings.
A general shift in the agency's approach has been evident since Trump's term began. In March, the SEC dropped nearly all lawsuits against crypto firms, as reported by CVJ.CH. The case with Ripple was one of the last remaining. The price of the cryptocurrency XRP did not react immediately and is currently trading at USD 2.36.
