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Ripple’s Battle With the SEC Rages On(2024 Update)

In 2020, the SEC served Ripple Labs with a lawsuit notice, alleging that they held an ICO, making Ripple an unregistered security. In true US fashion, it's 2024, and the SEC’s battle with Ripple continues to rage on. But what exactly is happening now?

We’ve created a timeline and explanation of the entire dispute between Ripple and SEC. If you would like to learn more or are a prospective investor in the platform, keep reading.

Traxer U4k Yv Irj M5 E Unsplash

What is Ripple?

Before we dive into our timeline, let’s discuss a bit about Ripple. Ripple is an altcoin, meaning it is a form of digital payment, but it is not Bitcoin. It is known for its ability to make cross-border payments easy, similar to how the Swift system is used by banks around the world to send international payments.

Ripple uses a token on its platform called XRP. Individuals can buy XRP for the purpose of using it on the platform. Over the years, Ripple has expanded its offerings to include several financial services, most of which are in the DeFi or decentralized finance space. One of these main offerings is a CBDC platform, which allows countries around the world to use the Ripple blockchain to make their own decentralized currency.

Ripple was founded in 2012 and quickly rose to become one of the most prominent altcoins. Currently, the platform has an estimated valuation of almost $11 billion.

Related: Ripple Mining: An Impossible Task

December 21, 2020: Lawsuit Filed by SEC

In December 2020, Ripple’s problems began when the SEC filed a lawsuit against the platform. In the paperwork, they alleged that Ripple was an unregistered security, mostly due to the fact that they had given out lots of XRP in exchange for marketing and labor. Additionally, the previous CEO of Ripple Labs, Chris Larsen, was accused of illegal personal transactions in Ripple, in amounts totaling over $600 million.  

To make matters worse, even though Chris Larsen is no longer CEO of Ripple, his predecessor, Brad Garlinghouse, was the receiver of much of these transactions, further raising suspicion of the status of the token and the reality behind the platform.

Following the lawsuit filing, Coinbase delisted the cryptocurrency on December 28, 2020.

March 3, 2021: The Battle is On

Ripple was in trouble, and they knew it from the minute they received the notice from the SEC and were delisted from Coinbase. Thus, they began to hire lawyers and prepare their case. The first hit came on March 3, just 3 months after the SEC made their move. In this motion, Ripple alleged that the SEC did not give Ripple labs fair notice of the allegations.

Related: A Comparison: Stellar vs. Ripple

March 8, 2021: An Immediate Hearing is Called

Not wanting to risk a mis-trial, the SEC called an immediate hearing just 5 days after Ripple’s allegations to clear the water. The trial was held on March 22, 2021.

March 22, 2021: Trial 1

Trial one on the case versus the SEC and Ripple was held just two weeks later and overseen by Judge Sarah Netburn. Unfortunately for Ripple, having the case held earlier was not beneficial to them as the judge ruled that XRP (Ripple) did have value and utility, meaning it could indeed be labeled a security, as the SEC had insinuated, however further investigation was needed.

This ruling was such a large move in the cryptocurrency world, that new policies were proposed by the SEC to give various platforms like Ripple Labs enough time to ensure their platforms were functioning legally before the US government could take further steps. The new proposal was published on April 13, 2021, and it gave token developers three years to get settled and legal before the SEC would file lawsuits or other legal discourse against them.

Sasun Bughdaryan E11 Oa3kvx4c Unsplash

September 17, 2022: Motions Filed by Both Sides

The original judge who overheard the preliminary case ruled that motions must be filed by September 17th, 2022. Both sides filed their motions for review. These motions were originally kept private but were finally revealed to the public sometime in spring 2023.

July 13, 2023: Ripple Prevails

The documents were reviewed and over 9 months later, the results were in. Ripple prevailed but it wasn’t a winner take all situation as they had hoped.

While the judge had agreed that Ripple didn’t break the law by selling tokens on exchanges like Coinbase, she did rule that when Ripple sold to hedge funds and other institutional investors, it broke the law. As such, $728.9 million of transactions performed were declared illegal.  

October 2023: SEC Drops the Original Charges

In October 2023, the SEC officially dropped some of the charges against the CEO and previous CEO of Ripple, they did, however, require restitution and fines to be paid in the amount of about $2 billion USD for the illegal transactions. This matter, like everything else in the case, would be addressed via the US court system.

June 14, 2024: Ripple Counters Restitution

On Friday, about 9 months after the last move by the SEC, Ripple made waves when they refused to pay the restitution outlined by the SEC last year, stating that there “were no victims” of the crime that was committed when they sold XRP to financial institutions. Ripple proposes, instead, to only pay $10 million to put their kerfuffle with the SEC behind them. Of course, the SEC is not happy about this proposition, at all and declined to accept their proposed amount.

This is still a developing story, and it isn’t certain yet what Ripple Labs will pay in the end to put their entire matter to rest. We assume that it will be something more than $10 million but also less than $2 billion. Only time will tell.

If you or someone you know, is an investor in Ripple, they may be interested in this story. However, it is important to note that the fine imposed by the SEC will stay with the SEC and US government. It will likely be used to cover the cost of the court case and will not be distributed to XRP buyers/holders.

You May Also Enjoy: What Are The Best Ripple Wallets?

Sec | Ripple labs | Sec vs ripple | Ripple lawsuit | Ripple settlement | Wells notice

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