The US Securities and Exchange Commission (SEC) and Ripple Labs have finally settled their much anticipated legal battle, which will see the blockchain company pay $125 million in civil penalties.
Ripple-SEC Legal Saga Ends
The following are the main features of the settlement, according to the court’s decision:
- Ripple has agreed to pay the SEC $125,035,150 in civil penalties, which is a substantial decrease from the regulator’s initial $2 billion demand.
- The court determined that Ripple’s “Institutional Sales” of the cryptocurrency XRP, which it considered to be unregistered investment contracts, constituted a violation of securities laws.
- The court decided that Ripple’s “Other Distributions” and “Programmatic Sales” of XRP did not qualify as unregistered securities offers, though.
- For “substantially the same reasons” as the programmatic sales, the court also decided that the individual XRP sales made by Chris Larsen and Brad Garlinghouse, the co-founders of Ripple, were not investment contract offerings.
XRP Price Soars 20%
Although Ripple’s “repeated and lucrative violations of securities laws were a serious offense,” the court concluded in its consideration that there were no claims of fraud, theft, or other more egregious misbehavior in this case. Furthermore, the court determined that the SEC had not established that investors were at danger of significant losses as a result of Ripple’s actions.
After fighting the SEC’s claims that XRP was an unregistered security, the blockchain payment startup has finally won a major, if not outright, win with the settlement. With the legal uncertainties lifted, the company may now proceed with its operations.
After plunging to a 1-month low of $0.4315 on Monday during the wider market meltdown, the price of XRP surged 20% as of this writing, trading at $0.6056, on news of the conclusion of this legal dispute.
