In a surprising turn of events, the U.S. Securities and Exchange Commission (SEC) has decided to drop allegations against Ripple’s CEO, Brad Garlinghouse, and Executive Chairman, Chris Larsen, regarding their involvement in the company’s alleged violation of federal securities laws in its XRP transactions. This unexpected move has led to the cancellation of a trial that was scheduled for the coming year, marking a significant development in the SEC’s protracted legal battle against Ripple.
As per the filing made on Thursday afternoon, both parties mutually agreed to dismiss the aiding and abetting charges against the two executives with prejudice, signifying that these charges cannot be reinstated. It is important to note that the SEC will, however, continue to pursue its claims against Ripple, as stated in the filing.
Brad Garlinghouse expressed his thoughts on the matter, stating, “For nearly three years, Chris and I have been the subject of baseless allegations from a rogue regulator with a political agenda. Instead of looking for the criminals stealing customer funds on offshore exchanges that were courting political favor, the SEC went after the good guys.”
Ripple secured a substantial victory in July, when the presiding judge ruled that the company had not breached federal securities laws by offering XRP to retail investors through exchanges. However, the same ruling determined that the company had indeed violated federal securities law by directly selling XRP to institutional investors. It is this latter aspect that remains the focal point of ongoing discussions between the SEC and Ripple, as highlighted in Thursday’s filing. The dropped charges pertain to the institutional sales, which were slated for trial in April.
“The SEC and Ripple intend to meet and confer on a potential briefing schedule with respect to the pending issue in the case – what remedies are proper against Ripple for its Section 5 violations with respect to its Institutional Sales of XRP,” the filing stated.
A spokesperson for the SEC declined to comment on the matter. Meanwhile, a press release from Ripple characterized the filing as a “surrender,” denouncing the initial pursuit as “absurd theatrics.”
Following this news, the price of XRP experienced a notable surge of approximately 4.1%, reaching $0.51.
Earlier this month, the SEC’s attempt to appeal its court loss in the Ripple case, while other issues continued through the trial process, was denied. This recent development further underscores the complexity and evolving nature of the legal battle between the SEC and Ripple.