The much-discussed legal struggle over cryptocurrency exchange regulations between Ripple and the U.S. Securities and Exchange Commission (SEC) has finally reached a conclusion. Ripple Labs CEO Brad Garlinghouse has confirmed that the company will drop its cross-appeal in this prolonged legal saga.
Impact on Cryptocurrency Exchange Regulations
Brad Garlinghouse announced on X, saying, “Ripple is dropping our cross appeal, and the SEC is expected to drop their appeal, as they’ve previously said. We’re closing this chapter once and for all and focusing on building the Internet of Value. Lock in.” In the stock market, XRP saw a slight boost of 1.4% following this announcement.
Just a day prior, U.S. District Judge Analisa Torres rejected a settlement deal that would lower Ripple’s fine to $50 million while removing an injunction against the company. Judge Torres emphasized the need for the ongoing injunction against Ripple, noting, “Indeed, if the Court should not be concerned about Ripple violating the law, why do the parties want to eliminate the injunction that tells Ripple, ‘Follow the law’?” she wrote. The court had imposed this injunction because there was a ‘reasonable probability’ of Ripple’s continued violation of federal securities laws. This latest development leaves the original civil penalty of $125 million intact and keeps the permanent injunction in place.
This marks the second instance of Judge Torres denying a settlement proposal, with an earlier attempt failing in May due to jurisdictional issues. Ripple’s decision ends its cross-appeal, implicitly accepting the initial terms enforced by the court.
The initial lawsuit was brought forward by the SEC under then-Chair Jay Clayton in 2020. It accused Ripple of breaching federal securities laws through the sales of their native token, XRP. In a 2023 judgment, Judge Torres established that while XRP sales to retail investors did not breach securities laws, sales to institutional investors did.
The resolution of this case sets a notable precedent in the realm of cryptocurrency exchange regulations. Cryptocurrency firms must now pay heed to the legal interpretations and frameworks being enforced by regulatory bodies like the SEC.
Understanding the Ripple Effect on Markets
As the legal dust settles, Ripple aims to shift its focus away from courtroom drama and towards further innovation in the crypto space. Observers anticipate that this case will influence how future cryptocurrency exchange regulations are formulated. Such regulations are crucial as they dictate how crypto businesses operate, influencing both investors and market dynamics.
This case illustrates the complexities associated with cryptocurrency exchange regulations and the necessity for compliance. A representative for Ripple was unavailable for comment at the time of publication.
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At Bakara Invest, our analysis suggests that the conclusion of Ripple’s legal case will significantly impact how future cryptocurrency exchange regulations are perceived and implemented, urging companies to prioritize compliance strategies.
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