Legal representatives representing the United States Securities and Exchange Commission have disclosed their plan. SEC seeks dismissal of all allegations against Ripple’s CEO, Brad Garlinghouse, and the executive chair, Chris Larsen.
In a legal filing submitted on October 19, specifically within the U.S. District Court for the Southern District of New York, the SEC formally conveyed to the court a significant development.
The development was that the parties involved in its lawsuit against Ripple had mutually reached an agreement for dismissal with prejudice.
Notably, the filing did not explicitly state that the SEC was withdrawing its civil litigation against Ripple, which was initially initiated in 2020. However, the filing stated that the SEC and Ripple have intentions to initiate discussions about establishing a prospective timetable to address the pending issue in the lawsuit.
This issue pertains to what remedies should be pursued in response to Ripple’s Section 5 violations concerning its Institutional Sales of XRP.
Key Developments as SEC Seeks Dismissal Against Ripple and the Cryptocurrency’s Response
Both parties have jointly requested an extension until November 9, 2023, to put forth such a timetable to the Court. In the event of a disagreement, they intend to request a timetable from the Court through a potentially contentious process.
Subsequent to this filing, Stuart Aldeorty, the chief legal officer of Ripple, characterized this action as a “capitulation on the part of the SEC.”
He framed it not as a negotiated settlement but as an abrupt surrender. The cryptocurrency company further conveyed its stance through a statement in which it labeled the SEC’s decision as a “remarkable surrender.”
“Chris and I […] were targeted by the SEC in a ruthless attempt to personally ruin us and the company so many have worked hard to build for over a decade,”
Garlinghouse expressed this perspective in a post made on October 19, originally on X (formerly Twitter).
The SEC’s Complex Legal Battle with Ripple: Unraveling the Timeline and Implications
The SEC’s engagement with Ripple began in December 2020. During that time, the commission initiated legal action against Garlinghouse, Larsen, and the corporation.
This action was primarily related to the sale of its XRP tokens. The SEC also argued that these tokens were securities. In July, a federal judge made a ruling.
According to the ruling, XRP did not meet the criteria to be classified as a security when it was sold to retail investors. The reasoning behind the SEC’s choice to drop the charges after nearly three years, especially with a trial scheduled for April 2024, remains undisclosed.
Katherine Kirkpatrick, the chief legal officer of Cboe Digital, offered a conjecture. She proposed that the decision to abandon the lawsuit against Garlinghouse and Larsen might indicate the SEC’s intent.
Specifically, it could signify the SEC’s intention to challenge the court’s ruling on XRP as a security. However, she noted that such a move would likely have to wait until the trial’s conclusion.
SEC’s Ongoing Legal Actions in the Cryptocurrency Sphere: Notable Cases and Upcoming Trials”
The SEC is currently pursuing other pending legal actions against prominent figures in the cryptocurrency domain. This includes the former CEO of Celsius, Alex Mashinsky, as well as the former CEO of FTX, Sam Bankman-Fried.
Mashinsky’s criminal trial is scheduled to commence in September 2024. In contrast, Bankman-Fried’s trial is expected to resume on October 26. Furthermore, the commission has instigated civil litigation against cryptocurrency exchanges, namely Binance and Coinbase.