- Stuart urges the incoming administration to restore trust after SEC’s controversial actions.
- Ripple-SEC case spans four years, challenging XRP’s classification as a security by the SEC.
- Ripple secured a partial win in 2023, ruling XRP trades on exchanges aren’t securities.
It has been four years since the SEC filed a lawsuit against Ripple and its Chief Legal Officer, Stuart Alderoty, has demanded action. In an X post, he encouraged the incoming administration to do more about the “stain” left behind by the case pointing to former SEC Director William Hinman’s actions.
The following is a chronological overview of the major events in the Ripple-SEC lawsuit from 2020.
December 2020: SEC Files Lawsuit Against Ripple
On 22nd December 2020, the SEC sued Ripple Labs and top executives, Brad Garlinghouse and Chris Larsen. The agency said that the XRP token by Ripple was an unregistered security. The lawsuit alleged that Ripple sold $1.3 billion worth of XRP in breach of federal securities legislation. To this, Ripple argued that XRP is a digital asset similar to other cryptocurrencies like Bitcoin.
2021: Ripple Fights Back
In January 2021, Ripple filed a motion to dismiss the SEC’s lawsuit. According to Ripple, the SEC provided no adequate notice that would exclude XRP from the category of digital assets. The defense also pointed to internal correspondence and unequal treatment of cryptocurrencies such as Bitcoin and Ethereum that the SEC never considered as a security.
In the same year, Ripple demanded the internal documents of the SEC, especially emails that contained information concerning William Hinman’s speech of 2018. In his speech, Hinman, the SEC’s former Director of Corporation Finance, argued that Ethereum was not a security. Ripple identified this speech as having caused confusion as to the legal position of XRP.
2022: Discovery Phase Highlights Key Discrepancies
The discovery phase in 2022 revealed internal SEC communications about Hinman’s speech. Ripple’s legal team alleged Mr. Hinman of expressing his opinions and not those of the law enforcement agency. This was a big win for Ripple after Judge Sarah Netburn directed the SEC to release these documents.
Meanwhile, Ripple expanded its defense, claiming that the SEC’s actions had unfairly harmed XRP holders. This led to the intervention of XRP investors, represented by attorney John Deaton, as amici curiae (friends of the court).
2023: Ripple Scores Partial Victory
Ripple finally found a victory in its case in July 2023 when Judge Analisa Torres made her ruling. The court affirmed that XRP sales through public exchanges were not securities. However, the sales of XRP to institutional buyers were considered to have a violation of securities laws. This was believed to be a partial victory in favor of Ripple but the SEC immediately appealed the decision.
Following the ruling, Ripple token XRP saw its value increase with exchanges like Coinbase relisting the cryptocurrency. The decision also affected the cryptocurrency market at large as it gave some understanding of how token sales might fall under the regulation of the US law.
Ripple vs. SEC: The Battle for Crypto Regulatory Clarity2024: Calls for Accountability
As the year 2024 ends, Ripple has kept on its defense against the appeal made by the SEC. Recalling the first lawsuit, Alderoty reminded that the company has been facing the issue for nearly four years and slammed the SEC for the manner in which they had conducted themselves in the matter, especially William Hinman. Alderoty further urged the incoming administration to rehabilitate the trust in the SEC.
Ripple’s continuous legal predicament has raised questions regarding legal loopholes in the United States regarding the crypto space. The case has attracted much attention as people attempt to find out the best way to deal with the digital asset issue. Ambiguity in the United States legal regulation of cryptocurrencies persists as Ripple awaits the outcome of the case on appeal from the SEC.
