The Securities and Exchange Commission is dropping its appeal against crypto firm Ripple, ending a four-year fight that began with what Ripple CEO Brad Garlinghouse on Wednesday called “the first major shot fired in the war on crypto.”
“With today's news, the war on crypto has ended in defeat for those who turned our own government against a technology and entire industry,” Garlinghouse said in a video posted on social media platform X. “I'm heartened that we have paved the way for other industry players to see the value in not backing down and for others to use our legal playbook to fight back. We are now closing a chapter in crypto history.”
The SEC sued Ripple in December 2020, alleging that sales of the company’s XRP constituted offering an unregistered security.
It was one of several lawsuits the SEC pursued against crypto firms in recent years under now-former Chair Gary Gensler, who said the crypto industry was rife with “hucksters, fraudsters, scam artists and Ponzi schemes.”
The SEC under Gensler wasn’t “out to protect investors,” Garlinghouse said.
“They were out to intimidate and terrorize,” he said. “The regulator, whose primary purpose is to protect investors, went all in on a non-fraud, victimless lawsuit and wiped out $15 billion of value from innocent XRP holders.”
XRP jumped 10% after Garlinghouse broke the news Wednesday, starting the day valued at $2.29 and ending it at $2.51. As of 11:30 a.m. Eastern time Thursday, it was valued at $2.47.
“The SEC was the market manipulator,” Garlinghouse said. “The SEC wasn't seeking justice. They were seeking to win a case at any cost.”
An SEC spokesperson declined to comment on the case.
U.S. District Judge Analisa Torres gave Ripple and the agency each a partial win in July 2023, ruling that the sale of XRP on public exchanges didn’t violate federal securities laws, but that XRP was a security when sold to institutional investors. Torres ordered Ripple to pay $125 million in penalties last year.
The SEC had appealed Torres’ decision.
A second Ripple executive, Chief Legal Officer Stuart Alderoty, wrote on X that the company will “evaluate how best to pursue our cross appeal.”
However, Ripple “is now in the driver's seat,” Alderoty said. “Today is a day to celebrate this victory.”
A person with knowledge of the situation said the $125 million fine, which is in escrow, is one of the reasons why Ripple is continuing with its cross-appeal.
The SEC of President Donald Trump’s second term has treated crypto far differently than the Biden-era iteration of the agency.
The abandoning of the Ripple case tracks with other recent actions the SEC has taken on crypto. The agency in recent weeks has dropped several cases and enforcement actions against crypto firms such as Robinhood, Coinbase, Gemini and Kraken.
“The SEC cost us tens of millions of dollars in legal bills alone and hundreds of millions in lost productivity, creativity, and innovation,” Gemini co-founder Cameron Winklevoss wrote in February on X. “Of course Gemini is not alone. The SEC’s behavior in aggregate towards other crypto companies and projects cost orders of magnitude more and caused unquantifiable loss in economic growth for America.”
