Ripple drops cross-appeal in SEC legal battle

Ripple Labs has withdrawn its cross-appeal in its legal battle with the US Securities and Exchange Commission (SEC).

CEO Brad Garlinghouse announced the decision on June 27 through a post on X, formerly known as Twitter.

He said the company aims to “close this chapter once and for all” and focus on business operations.

The case began in 2020, with the SEC alleging Ripple raised US$1.3 billion through the sale of XRP, which it claimed was an unregistered security.

In a 2023 ruling, Judge Torres found Ripple’s programmatic sales of XRP did not violate securities laws.

However, she ruled that direct sales to institutional investors were securities, leading to a US$125 million fine.

🔗 Source: The Block

🧠 Food for thought

1️⃣ Regulatory uncertainty creates measurable market volatility

SEC enforcement actions against crypto companies consistently trigger significant market reactions, with affected cryptocurrencies dropping an average of 5.2% within three days of announcements and deepening to 17.2% over 30 days1.

This volatility pattern was evident throughout Ripple’s case, culminating in XRP’s 4.49% price surge when Ripple announced it was dropping its cross-appeal and effectively ending the legal battle2.

The market’s sensitivity to regulatory developments highlights why Ripple’s decision to “close this chapter once and for all” represents more than just legal strategy. It aims to provide the stability necessary for broader adoption and investment.

The consistent price fluctuations connected to regulatory events demonstrate how legal clarity directly translates to market confidence, with XRP’s market performance closely tracking the case’s major developments since it began in December 20203.

2️⃣ SEC’s crypto enforcement strategy shows signs of evolution

The SEC’s approach to cryptocurrency has undergone significant shifts, with enforcement actions peaking at 46 in 2023 before declining by 26% in FY 2024 to the lowest number in the past decade4.

This decline coincides with the resolution of high-profile cases like Ripple’s, suggesting a potential recalibration of the SEC’s enforcement priorities as key precedents become established5.