The SEC and Ripple settle a crypto securities case after five years.
The US Securities and Exchange Commission (SEC) has ended its securities lawsuit against Ripple Labs, leaving in place a $125m fine and an injunction restricting institutional sales of the company’s XRP token.
Announced on August 7, the agreement marks the end of one of the cryptocurrency industry’s most high-profile legal battles.
Filed in December 2020, the SEC’s complaint alleged that Ripple had raised more than $1.3bn by selling XRP in an unregistered securities offering. The dispute centred around the issue of whether certain digital tokens should be treated as securities, regulated like stocks, or as commodities, regulated more like gold or oil.
In July 2023, US District Judge Analisa Torres delivered a mixed verdict. She found sales of XRP to institutional investors met the legal definition of a securities transaction, while sales on public exchanges did not.
The decision was widely viewed as a partial win for Ripple and a significant setback for the SEC’s broader push to categorise most cryptocurrencies as securities.
In 2024, Torres imposed a $125m penalty and prohibited Ripple from selling XRP to institutional buyers without SEC registration. Ripple and the SEC both appealed the ruling, with the company seeking to reduce the fine to $50m and the regulator aiming to challenge aspects of the decision.
In August 2024, Torres rejected the joint request to lower the penalty, ruling that neither side had shown “exceptional circumstances” to warrant a change.
Last week, both parties dropped their appeals, leaving the fine and injunction in place. Ripple Chief Legal Officer Stuart Alderoty described the dismissals as “the end” of the matter in a post on X.
Why does this matter?
For Ripple, the decision offers long-awaited clarity that could unlock new opportunities for its cross-border settlement product, On-Demand Liquidity (ODL). The solution uses XRP to facilitate instant transactions between currencies, but adoption among banks and payment providers has been slowed by regulatory uncertainty.
With the court confirming that XRP is not a security when sold on public exchanges, institutions now have a clearer path to compliance. Additionally, Ripple can resume institutional XRP sales under defined conditions.
The ruling also sets a precedent for the wider industry.
The court’s distinction between institutional sales and public exchange sales confirms that not every token transaction counts as a securities deal, especially when the token is mainly used for practical purposes rather than as an investment.
This clarity is a boost for stablecoin issuers, tokenised payment platforms and decentralised finance (DeFi) projects offering payment services.
The US’ wider ambitions
The conclusion of SEC v Ripple comes as the US takes a more assertive approach to digital asset regulation.
Since President Donald Trump returned to the White House earlier this year, the SEC has dropped lawsuits against major exchanges, including Binance, Coinbase and Kraken, marking a move away from the “regulation-by-enforcement” strategy of the previous administration.
This change was proven on July 31, when SEC Chairman Paul S. Atkins unveiled “Project Crypto”, a plan to modernise securities rules for the blockchain era. Atkins said the US is “going all in” on on-chain finance and pledged to bring back crypto businesses that had moved overseas.
Atkins has instructed the SEC’s Crypto Task Force to draft new proposals on token distributions, custody and trading. If delivered, these changes could reshape how companies raise capital, store assets and operate trading platforms.
