The civil lawsuit against the Ripple executives had been ongoing since December 2020.
Lawyers representing the United States Securities and Exchange Commission announced they will seek to dismiss all claims against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen.
In an Oct. 19 filing in U.S. District Court for the Southern District of New York, the SEC notified the court the parties involved in its case against Ripple “have stipulated to the dismissal with prejudice”, suggesting there was no need to schedule an upcoming trial. The filing did not state that the SEC was dropping its civil case against Ripple itself, first filed in 2020.
“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—and respectfully request until November 9, 2023 to propose such schedule to the Court or, if the parties cannot agree, to seek a briefing schedule from the Court on a contested basis,” said the filing.
In response to the filing, Ripple chief legal officer Stuart Aldeorty called the move “a surrender by the SEC” rather than a settlement. The crypto firm released a statement referring to the SEC decision as a “stunning capitulation”.
“Chris and I […] were targeted by the SEC in a ruthless attempt to personally ruin us and the company so many have worked hard to build for over a decade,” said Garlinghouse in an Oct. 19 X (formerly Twitter) post.
Today was an even better day.
Ripple: 3
SEC: 0In all seriousness, Chris and I (in a case involving no claims of fraud or misrepresentations) were targeted by the SEC in a ruthless attempt to personally ruin us and the company so many have worked hard to build for over a… https://t.co/YsQxewFnj9
— Brad Garlinghouse (@bgarlinghouse) October 19, 2023
The SEC’s actions on Ripple began in December 2020 when the commission filed a lawsuit against Garlinghouse, Larsen, and the company largely over sales of its XRP tokens, which the commission also claimed were securities. In July, a federal judge ruled that XRP was not a security when sold to retail investors.
Related: Judge rejects SEC’s motion to file an appeal against Ripple ruling
It’s unclear why the SEC chose to drop the charges after almost three years, with a trial scheduled to begin in April 2024. Katherine Kirkpatrick, the chief legal officer of Cboe Digital, speculated that dropping the lawsuit against Garlinghouse and Larsen could suggest the SEC plans to appeal the court decision on XRP as a security — something she said would have had to wait until the conclusion of the trial.
The SEC has other pending cases against high profile figures in the crypto space including former Celsius CEO Alex Mashinsky as well as former FTX CEO Sam Bankman-Fried. Mashinsky’s criminal trial is scheduled to begin in September 2024, while Bankman-Fried’s trial is expected to resume on Oct. 26. The commission has also filed civil lawsuits against crypto exchanges Binance and Coinbase.
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