Recent developments suggest that the U.S. Securities and Exchange Commission (SEC) may be nearing a conclusion in its long-running enforcement case against Ripple Labs, marking a significant chapter in the evolving landscape of cryptocurrency regulation.
According to a recent report by Fox Business reporter Eleanor Terrett, the SEC’s case against Ripple, which has been ongoing for more than four years, is ‘in the process of wrapping up.’ This follows an appeal and cross-appeal concerning a $125 million court judgment made in August 2024. The civil suit, initiated in December 2020, alleged that Ripple and some of its executives had unlawfully utilized XRP as an unregistered security to facilitate fundraising.
Stuart Alderoty, Ripple’s chief legal officer, indicated that the ongoing SEC civil case is ‘far more advanced’ than numerous others that have been dropped since the inauguration of U.S. President Donald Trump and the departure of former Chair Gary Gensler. Since the start of the year, the SEC has opted not to pursue enforcement actions against several companies, including Coinbase and Kraken.
While discussing the potential resolution with the SEC, Alderoty acknowledged that the existing appeal complicates matters. Still, he expressed optimism about reaching a settlement. If both parties agree to terminate their appeal and cross-appeal in the Second Circuit, the original judgment would remain intact. However, if disagreements arise concerning the monetary judgment, both parties would need to jointly petition a judge for modifications.
The Ripple case holds significant implications for the cryptocurrency industry, particularly following Judge Analisa Torres’s notable ruling, which determined that XRP is not classified as a security under SEC regulations—specifically regarding programmatic sales on exchanges. This ruling was one of the first major victories for the crypto sector and has been closely followed by industry participants.
Shifting Enforcement Dynamics under Changing Leadership
Interestingly, while the SEC launched the Ripple case during the tenure of former Chair Jay Clayton, the commission increased its enforcement activities following Gary Gensler’s appointment in 2021. Ripple CEO Brad Garlinghouse remarked in a December 2024 interview that the company’s heightened political engagement was influenced by the current SEC leadership.
Ripple has made notable political contributions, totaling $45 million to the Fairshake political action committee (PAC) in the previous election cycle and an additional $25 million in November 2024. Furthermore, Ripple committed $5 million in XRP to fund Trump’s inauguration, reflecting the firm’s willingness to engage with the political realm. Such contributions have raised eyebrows and fueled discussions about potential conflicts of interest, particularly as the SEC has recently halted several enforcement actions.
Alderoty maintained that the SEC’s decision to cease enforcement cases was ‘independent’ of political donations, attributing it more to the current Acting Chair Mark Uyeda’s perspective on the cryptocurrency sector and its regulatory environment.
As of now, the U.S. Senate has not slated any hearings regarding the nomination of the next SEC chair, Paul Atkins. SEC Commissioner Hester Peirce indicated that there might be a more cautious approach to setting a regulatory agenda for cryptocurrency once a new leader assumes office.
With the Ripple case potentially coming to an end, the outcomes will certainly shape not only Ripple’s future but also influence the wider regulatory landscape for the entire cryptocurrency industry. Stakeholders are keenly awaiting the final resolutions, as they will set critical precedents for regulatory compliance and enforcement actions moving forward.
