The U.S. Securities and Exchange Commission (SEC) has announced a surprising reversal in its case against Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen. SEC lawyers have decided to seek dismissal of all claims against these prominent figures in the cryptocurrency industry.
Ripple with another victory
In a lawsuit filed Oct. 19 in the U.S. District Court for the Southern District of New York, the SEC said the parties involved in the case “have agreed to dismiss with prejudice,” suggesting there will be no trial anytime soon. Nevertheless, this does not mean that the SEC is withdrawing from the civil case against Ripple itself.
The official statement said: “The SEC and Ripple intend to meet and confer regarding a potential briefing schedule with respect to the outstanding issue in the case – what remedies are appropriate against Ripple for Section 5 violations with respect to the institutional sale of XRP – and respectfully request by November 9, 2023, that such a schedule be proposed to the Court or, if the parties cannot agree, that the Court seek a briefing schedule on a contested basis.”
In response to the filing, Ripple’s chief legal officer, Stuart Aldeorty, described the move as a “capitulation on the part of the SEC” rather than a resolution of the conflict. The cryptocurrency company also issued a statement describing the SEC’s decision as a “stunning capitulation.”
Bradow Garlinghouse commented on the situation in a post on the X platform (Twitter), saying:
“Chris and I have been targeted by the SEC in a ruthless attempt to personally ruin us and the company that so many have worked so hard to build for over a decade.”
The lawsuits against Ripple were initiated by the SEC in December 2020, when the commission filed a lawsuit against Garlinghouse, Larsen and the company itself, mainly in connection with the sale of XRP tokens, which the commission claimed had the characteristics of securities. In July, a federal judge ruled that XRP did not meet the criteria for a security when it was offered to retail investors.
Unclear reasons for decision
The reason why the SEC dropped the charges after so long remains unclear. Katherine Kirkpatrick, legal director of Cboe Digital, has put forward speculation that the move may indicate the SEC’s intention to challenge the court’s decision regarding XRP as a security, but such a possibility will have to wait until the trial is over.