In a pivotal turn of events in the nearly three-year-long securities violation case against Ripple, the U.S. Securities and Exchange Commission (SEC) has withdrawn charges against CEO Brad Garlinghouse and Executive Chairman Chris Larsen on Friday. The SEC, led by Gary Gensler, has instead redirected its legal strategy towards examining Ripple's direct XRP sales to institutions as potential federal securities laws violations.
This decision follows a significant victory for Ripple in July 2023 when Judge Torres ruled that XRP was not a security. The court ruling marked Ripple's XRP retail sales via exchanges as lawful but flagged institutional sales as violations. As the case transitions into its remedy briefing phase, escalating negotiations between Ripple and the SEC are underway.
Ripple's recent triumph in evading a court trial for its top brass suggests a potential tilt in legal scales. Legal expert Fred Rispoli reads these developments as signs of a potential settlement, which could shape the broader cryptocurrency regulatory landscape.
Both Garlinghouse and Larsen have voiced their criticism of the SEC's approach, accusing it of "absurd theatrics" and perceived abuse of power. They questioned the origin and motivation behind SEC’s pursuit, while highlighting the personal toll on individuals. Garlinghouse went further to accuse the SEC of targeting US companies over offshore criminal activities.
Eleanor Terrett, a Fox Business correspondent, noted that an immediate SEC appeal is unlikely due to procedural norms waiting for a final judgment post the penalty phase, potentially spanning months. Katherine Kirkpatrick, Cboe Digital's chief legal officer, speculated on X (formerly Twitter) that the SEC may have used this legal tactic to expedite an appeal against Ripple's decision.
The outcome of this lawsuit holds broader implications for the cryptocurrency industry regarding defining digital assets as securities. It remains to be seen how this shift in focus will impact Ripple's operations and the broader regulatory landscape.
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