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Ripple vs SEC: This week marks the fourth anniversary of the U.S. Securities and Exchange Commission (SEC) filing its lawsuit against Ripple Labs, co-founder Chris Larsen, and CEO Brad Garlinghouse. Since December 2020, the legal battle has had significant repercussions on XRP and its investors, reshaping the landscape of cryptocurrency regulation.
The SEC’s lawsuit, filed during former SEC Chair Jay Clayton's final days in office, accused Ripple of selling unregistered securities through XRP. Over the past four years, XRP has endured a tumultuous journey, including losing its status as the second-largest cryptocurrency by market cap and plummeting to a March 2020 low of $0.1009.
Despite the setbacks, XRP has rebounded significantly, reaching a high of $2.9070 in December 2024. The crypto community attributes part of this recovery to renewed optimism following the re-election of Donald Trump, who has signaled a pro-crypto agenda.
Trump’s administration has promised to foster innovation in the cryptocurrency sector, raising hopes for a resolution to the long-standing Ripple case. However, the SEC’s recent moves suggest that the case is far from over.
The SEC has indicated its intention to pursue an appeal, with the deadline for filing its opening brief set for January 15, 2025. This timeline coincides with SEC Chair Gary Gensler’s impending departure on January 20, raising the possibility of the SEC attempting to secure its position before the leadership transition.
Gensler has bolstered the SEC’s enforcement division during his tenure, promoting experienced crypto litigators to senior roles. This strategic move could signal the agency’s commitment to maintaining a tough stance on Ripple and other crypto-related enforcement cases.
The Ripple case remains a focal point for the cryptocurrency industry due to its potential to set a landmark precedent. In July 2023, Judge Analisa Torres ruled that the programmatic sales of XRP did not meet the third prong of the Howey Test, indicating they were not securities.
This ruling has already influenced other legal cases involving the secondary sales of cryptocurrencies. If the SEC’s appeal is withdrawn or fails, the Programmatic Sales ruling could become a cornerstone in crypto regulation, offering clarity and reducing legal risks for blockchain projects.
The uncertainty surrounding the SEC’s appeal has weighed on XRP, leading to a pullback from its December highs. The incoming SEC Chair, Paul Atkins, is expected to bring a more crypto-friendly approach, potentially reversing the agency’s aggressive enforcement strategy.
However, if the SEC proceeds with its appeal, Atkins would need to navigate the complex process of withdrawing it. Under SEC rules, such decisions require an agency vote, not solely the Chair’s discretion. This procedural hurdle could prolong the uncertainty for Ripple and XRP investors.
Adding to the intrigue is an ongoing investigation by the Office of Inspector General (OIG) into alleged conflicts of interest within the SEC regarding its crypto enforcement actions. If the OIG finds evidence of bias or misconduct, it could significantly influence the SEC’s decision on whether to continue its appeal.
Political pressure may intensify if the OIG’s findings undermine the agency’s credibility, potentially forcing a withdrawal of the appeal. Such a development would solidify the Programmatic Sales ruling as a pivotal precedent in crypto regulation.
As the legal battle continues, Ripple remains focused on expanding its blockchain-based payment solutions globally. The company has secured partnerships with financial institutions and payment providers, highlighting its resilience amid legal challenges.
For XRP, the market dynamics remain tied to the outcome of the SEC case. While optimism surrounding Trump’s administration and the potential for regulatory clarity offer hope, the path forward depends on the SEC’s next moves and internal decision-making processes.
The Ripple vs SEC case has defined the regulatory landscape for cryptocurrencies over the past four years. As the anniversary highlights the ongoing legal complexities, the outcome of the SEC’s appeal and potential political developments will be critical for the future of XRP and broader crypto regulation.
With the January 15 deadline approaching, the stakes remain high, and the industry is watching closely to see whether the case concludes or enters yet another phase of uncertainty.
