Ripple Settles with SEC
Ripple recently reached an agreement with the US Securities and Exchange Commission (SEC) to pay a $50 million penalty and drop its cross-appeal in the ongoing lawsuit.
Key Points:
- Ripple to pay a $50 million penalty to the SEC
- SEC to lift injunction on XRP sales to institutions
- Remaining $75 million to be returned to Ripple
Final Update on Legal Dispute
Ripple’s chief legal officer, Stuart Alderoty, confirmed that the $50 million penalty would be kept by the SEC, while the remaining $75 million would be returned to Ripple from an escrow account. This settlement is likely the final update on the legal battle that began in December 2020.
Legal Battle Background
The legal dispute began in December 2020, with Judge Analisa Torres ruling that institutional sales of XRP met the criteria for investment contracts under the Howey Test. This led to financial penalties and a permanent injunction on institutional XRP sales.
Market Reaction
Despite the legal developments, XRP’s price remained stable at $2.47. The market considered the ruling important in clarifying that not all crypto asset sales automatically constitute securities transactions.
Ripple Challenges Injunction
Key Points:
- Ripple objected to the injunction in the lawsuit
- Firm argued against admitting wrongdoing
- Ripple sought clarity on regulatory policy
Ripple’s objection to the injunction played a crucial role in the lawsuit’s conclusion. The firm believed that accepting the prohibition could imply wrongdoing, impacting its operations and fundraising efforts.
Legal analyst James Murphy suggested that Ripple’s resistance to the terms stemmed from concerns about regulatory consistency. The firm argued for penalties to be reconsidered in light of evolving regulatory policies.
Reports indicated that the SEC was evaluating whether XRP could be classified as a commodity rather than a security, comparing it to Ethereum (ETH).
