The U.S. Securities and Exchange Commission (SEC) has made a surprising announcement that it will seek to dismiss all claims against Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen. The SEC, in an October 19 filing with the U.S. District Court for the Southern District of New York, stated that the parties involved in the Ripple case "have agreed to dismiss with prejudice," suggesting that a trial for the upcoming lawsuit may not be necessary. However, it's important to note that the SEC does not intend to drop its civil lawsuit against Ripple itself, which was initially filed in 2020.
The filing indicates that "the SEC and Ripple intend to meet and agree on a potential briefing schedule on the outstanding issues in this case," referring to the appropriate remedies for Ripple's institutional sales of XRP that allegedly violated Section 5 of securities laws. The parties plan to request approval for the briefing schedule by September 9. 2023. and will present it to the court, or if an agreement cannot be reached, they will seek a contested schedule from the court.
In response to this development, Ripple Chief Legal Officer Stuart Alderoty characterized the SEC's action as a "capitulation" rather than a settlement. Ripple issued a statement referring to the SEC's decision as a "shocking capitulation." Brad Garlinghouse expressed his thoughts on the matter on social media, stating, "Chris and I [...] were targeted by the SEC who relentlessly tried to personally destroy us and many others for over a decade." This latest move has raised questions regarding the SEC's motivations behind dropping the charges after almost three years and with a trial initially scheduled to commence in April 2024.
In the course of this legal battle, the SEC initiated action against Ripple in December 2020. targeting Garlinghouse, Larsen, and the company. The SEC's primary concern centered around the sale of XRP tokens, which they also alleged were securities. In July, a federal judge ruled that XRP sold to retail investors did not meet the criteria for classification as a security. However, the reason for the SEC's decision to dismiss the claims is still unclear. Some experts speculate that it may be linked to the SEC's intention to appeal the court's determination on XRP's status as a security, which may only occur once the trial is concluded.
It is essential to note that the SEC has ongoing cases against other notable figures in the cryptocurrency space, including former Celsius CEO Alex Mashinsky and former FTX CEO Sam Bankman-Fried. Mashinsky's criminal trial is scheduled to commence in September 2024. and Bankman-Fried's trial is set to continue on October 26. The SEC has also filed civil lawsuits against cryptocurrency exchanges Binance and Coinbase, indicating that it remains actively engaged in pursuing legal action in the crypto industry.
