Ripple's Chief Legal Officer, Stuart Alderoty, revealed details about the SEC’s proposed settlement terms with Ripple before the SEC officially filed a lawsuit against the company in December 2020.
Reflecting on the third anniversary of the lawsuit, Alderoty highlighted the SEC’s suggested settlement terms before initiating the legal action. He mentioned that the SEC proposed a settlement requiring Ripple to publicly affirm XRP as a security and allow the market a brief window for compliance in 2020. However, Ripple objected to this proposal, asserting that XRP did not classify as a security. Moreover, Ripple argued that the SEC had not established a clear regulatory framework for crypto compliance.
Alderoty clarified that the SEC did not offer distinct guidelines for cryptocurrency compliance during that time. Despite criticisms from the industry and Ripple’s efforts, U.S. regulators have yet to establish comprehensive regulatory standards for the cryptocurrency sector even three years after the XRP lawsuit. Instead, the SEC has opted for an enforcement-focused approach, initiating legal actions against major crypto exchanges like Coinbase and Binance.
A key aspect emphasized by Alderoty is that the primary focus of the case has always been to establish that XRP itself is not a security. U.S. cryptocurrency businesses have argued that current securities laws are ill-suited for crypto-assets, yet the SEC’s progress in establishing a specific regulatory framework for cryptocurrencies remains limited.
In a July 2023 summary judgment, Judge Analisa Torres ruled that XRP did not qualify as a security in retail transactions.
