Why is the Ripple SEC case still ongoing amid a sea of resolutions?

In current weeks, the Securities and Trade Fee (SEC) has been on a dismissal spree. First Coinbase, then Consensys, Gemini and OpenSea. Yesterday, it was Kraken. One after the other, just about each high-profile enforcement motion of the period of former SEC chair Gary Gensler has fallen.

This alerts to the cryptocurrency business that US President Donald Trump’s administration won’t govern like the final. Certainly, Commissioner Hester Peirce, who is presently serving as head of the SEC’s Crypto Job Power, launched a public statement explaining that the SEC wouldn’t be regulating by enforcement anymore: 

“The choice by the earlier Fee to shift this operate to the Division of Enforcement by partaking in a large-scale regulation-by-enforcement initiative harmed the American public, adversely affected the business, and impeded the capacity of the Fee’s expert and devoted skilled workers to make use of their experience because it was meant for use.”

One case, nevertheless, has been conspicuously absent from the bevy of dismissals — an ungainly anomaly. That case, of course, is Ripple. 

The origins of the Ripple case

The Ripple case is one of the oldest and most influential in crypto. Again in the 2010s, when crypto legislation was still younger, the SEC was simply dipping its toes into enforcement. It began with “The DAO Report,” a seminal doc initially making use of the now-famous Howey check to cryptocurrency. 

Then, in December 2020, the Ripple complaint got here as a shot throughout the bow of the crypto institution. The allegation that Ripple’s gross sales of the token XRP was a “years-long unregistered providing of securities” would type the playbook for all subsequent SEC enforcement actions. 

It appears unusual now, however the Ripple case preceded former President Joe Biden and Gensler. It got here in the final months of the first Trump administration when Jay Clayton was still SEC chair. For a whereas, this made it an oddity. In the quaint pre-FTX days when Gensler was perceived as a “pro-crypto” commissioner, XRP remained an odd pariah for years. In regulatory limbo, the token was unavailable on many US centralized exchanges and so missed the growth years of 2021 and 2022. 

As the first main crypto case, rulings in Ripple can be extremely influential in the authorized posture of the business. Most notably, a 2023 abstract judgment ruling wherein Choose Analisa Torres granted the firm a partial victory, holding that blind bid-ask gross sales of XRP didn’t represent securities as a result of “they didn’t derive [an expectation of profit]” from Ripple’s efforts [because buyers were not aware] that they had been shopping for XRP from Ripple.”

At the time, this was seen as a main victory in cryptocurrency. The SEC tried to certify an interlocutory attraction and failed, and over the ensuing yr, the case slowly wound down, culminating in a $125 million judgment against Ripple in August of final yr.

Finally, the seminal cryptocurrency enforcement motion was eclipsed in the public eye by higher-profile disputes with Coinbase, Uniswap and others. In a single of the final acts of the outgoing Biden administration, the Gensler SEC appealed the Torres judgment on Jan. 15, 2025. Ripple, for its half, filed a discover of cross-appeal on Oct. 15, 2024, and has not but filed an attraction.

Ripple aligns with White Home

As of writing time, the Ripple case has been silent since Jan. 31, 2025. The SEC has methodically dismissed just about each cryptocurrency motion and investigation on its docket, but Ripple has remained mysteriously caught. 

This is unusual on a number of ranges. For one, the arguments for attraction on Ripple are just like these at difficulty in a parallel Coinbase interlocutory attraction that Southern District of New York Choose Katherine Polk Failla licensed again in January. The SEC let that one go, dismissing the case on Feb. 27, 2025. 

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Secondly, Ripple appears to be in the White Home’s good graces. Ripple has publicly courted Trump’s favor in current months. This included a assembly between Ripple CEO Brad Garlinghouse and Trump in Mar-a-Lago earlier than his inauguration and a reported contribution of $5 million in XRP to Trump’s inauguration fund. 

Whereas it is not possible to know for positive, it does appear that these gestures have impressed heat emotions amongst the MAGA inside circle. In February, Trump’s son, Donald Trump Jr., adopted Ripple on X. Extra not too long ago, on March 2, Trump named XRP as one of 5 cryptocurrencies to be included in a Strategic Crypto Reserve.

In gentle of what is extensively perceived as a clientelist White Home, all of this means that Ripple needs to be first in line for SEC favor. But the case stays unresolved. What might probably be taking place?

Three explanation why the Ripple case could also be ongoing

The reality of the Ripple thriller is that why the case is still pending is unknown. No SEC workers member or Ripple legal professional has commented. Nonetheless, there are a quantity of potential explanations value contemplating. 

In contrast to Coinbase, which was still pending pre-dismissal, Ripple reached a ultimate judgment. Which means if the SEC stopped combating, the final result wouldn’t be a Ripple victory however a $125 million wonderful and a five-year “dangerous actor” prohibition on safety fundraising that Choose Torres imposed on Ripple.

Which means, in some sense, Ripple wants the case to proceed to acquire a favorable ruling. Whereas it is potential that it might persuade the SEC to affix it in looking for to vacate Torres’ judgment, it is not apparent that Torres would agree to take action. 

James Murphy, a authorized commentator, not too long ago speculated as a lot:

“The Torres determination was unquestionably GREAT for $XRP holders, BUT The (a) discovering of securities legislation violations and the (b) injunction (with attendant “dangerous boy” provisions) will not be so nice for Ripple,” Murphy mentioned. “This is significantly true if Ripple is contemplating a future exempt securities providing or IPO.”

“I imagine the SEC would have accepted a settlement—the place either side dismiss their appeals and the SEC takes the $125 million penalty—in a heartbeat. So, it is smart (to me not less than) that Ripple might be negotiating for a higher deal than that.” 

Ripple could also be enjoying hardball, however would Trump permit the SEC to push again? One other riskier tactic can be for the events to furtively conform to proceed the matter on attraction, however with the SEC as a celebration in identify solely. The SEC might play lifeless at hearings, successfully bettering Ripple’s odds of acquiring favorable judgment on attraction at the Second Circuit.

An identical tactic was famously used (although overtly, not furtively) by the Justice Division throughout President Barack Obama’s time period to facilitate appellate evaluate of the Protection of Marriage Act (DOMA) in United States v. Windsor.

Whereas doubtlessly becoming some of the information, this rationalization is additionally incomplete. In spite of everything, the SEC might facilitate evaluate with out concurrently sustaining its attraction. If it was actually attempting to help a Ripple authorized victory, why not let its personal appellant case drop? This strategy would additionally danger an unfavorable consequence at the 2nd Circuit, which might depart Ripple no higher off than it was in August. 

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The ultimate rationalization that might make sense is that there are still voices at the SEC who care about their interpretation of the legislation and wish to defend it. At the time of the Torres ruling, many practitioners believed it incorrectly utilized to securities legislation. Cryptocurrency attorneys have come to embrace its logic, nevertheless it is clear that the SEC all the time noticed it as a black spot on its litigation document and fought laborious to attraction it instantly. 

Attorneys at the SEC select that occupation as a result of they care about the integrity of US monetary markets, and it is potential there are still voices inside the Fee that imagine permitting the Ripple ruling to go unchallenged will impair that mission. 

Maybe these voices are ready for Paul Atkins, the incoming SEC chair, to be confirmed earlier than making a definitive dedication on the Ripple case. 

Finally, this case is a vestige of an earlier period. Whereas case legislation was as soon as seen as a determinant of cryptocurrency tokens’ authorized standing, this may occasionally now not be the case. The outdated guidelines had been thrown out when Trump ascended to energy once more, and the new guidelines are but to be written. The Ripple case will most likely be dropped in the coming days as the SEC both works by its docket or the sides attain some settlement. Even when it continues to decision, although, it is unlikely to affect enforcement over the subsequent 4 years. 

In the Trump period, regulation seems to be effected by dealmaking, not legislation.

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