According to U.Today, in December 2020, the SEC sued fintech company Ripple, alleging that the company violated the law by raising funds through the sale of XRP without registering it as a security. This case has been closely monitored due to its potential implications for the SEC's regulatory authority over cryptocurrency. In July last year, U.S. District Judge Analisa Torres ruled that XRP is not a security in itself, a decision seen as a significant victory for the industry. The SEC, led by Chairman Gary Gensler, has filed several major cases against cryptocurrency exchanges and issuers, accusing them of offering unregistered securities.
On August 7, 2024, Judge Torres issued a remedies order requiring Ripple to pay $125 million for unregistered XRP sales to sophisticated third-party institutions. This amount is significantly lower than the SEC's request for $2 billion in fines and penalties. There were no findings or charges of fraud or recklessness against Ripple, nor was there any evidence that anyone suffered financial harm. Judge Torres also imposed an injunction prohibiting Ripple from further violating securities laws but refused the SEC's request for Ripple to disgorge gains from its sales. The regulator had sought over $876 million in disgorgement, over $198 million in interest, and an $876 million civil penalty, while Ripple argued it should not have to pay more than $10 million.
On October 2, the SEC announced its intention to appeal the Court's decision that certain prior XRP distributions by Ripple were securities. However, the SEC's appeal does not address whether XRP is a security in itself. The Court found in Ripple's favor that XRP is not a security, and the SEC will not appeal that ruling. On October 24, Ripple submitted its Form C, outlining the issues it intends to bring in its cross-appeal. Given that the parties are challenging the Court's judgment, Ripple placed the $125 million set aside for remedies in an escrow account. On October 31, the Second Circuit Court of Appeals issued an Order requiring the SEC's brief to be filed on or before January 15, 2025. The appeal and cross-appeal briefing could occur in the first half of 2025, followed by an argument before the appellate court, most likely in the fall of 2025, and a final decision from the court. Ripple mentioned this in its most recent Q3, 2024 XRP Markets Report.
