SEC Dismisses Lawsuit Against Ripple Execs in ‘Stunning Capitulation’

The United States Securities and Exchange Commission (SEC) voluntarily dismissed charges Thursday against Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen, both of whom had been charged alongside the company for allegedly violating securities laws with sales of the XRP token.

Ripple described the decision as a “stunning capitulation” in a press release, while Ripple Chief Legal Officer Stuart Alderoty called it “a surrender by the SEC” in a tweet. The price of XRP is up about 5% today, with most of that upward action coming after the news broke.

Garlinghouse and Larsen were first charged in late 2020, along with Ripple, for allegedly violating securities laws by offering and distributing the cryptocurrency XRP. In July, a federal judge ruled that the XRP token “is not necessarily a security on its face,” and that Ripple’s programmatic sales of XRP on exchanges were not securities offerings, in a major victory for the crypto company. Earlier this month, the SEC failed to convince the same judge that the ruling should be overturned before a final judgment is entered in the case next spring.

“It is a travesty that we were forced to defend ourselves from an ill-advised attack that was flawed from the day it was filed,” Ripple Executive Chairman Chris Larsen said in a statement. “While justice ultimately prevailed, the government’s actions that led to this point raise questions about the origin and motivation of this lawsuit.”

It is unclear what specifically led the SEC to drop charges against Garlinghouse and Larsen as individuals, though the move may have been informed by the agency’s recent string of court losses against Ripple. The SEC did not immediately respond to Decrypt’s request for comment.

Regardless, the regulator is still pressing forward with its overarching case against Ripple—one which, for years, has been framed as a defining legal showdown set to dictate the fate of crypto regulation in the United States. For this reason, Ripple’s legal fight against the SEC has been supported by numerous major players of the crypto industry, including the American crypto exchange Coinbase. 

While the industry has taken Ripple’s recent string of legal victories as a sign of major encouragement—the crypto market soared $73.5 billion in value in the hours following Ripple’s favorable July ruling—the company, and the crypto ecosystem as a whole, are not out of the woods yet.

The judge overseeing the SEC’s suit against Ripple found in July that the sale of XRP tokens to institutional investors did constitute illegally unregistered securities offerings. Further, the SEC is actively engaged in a slew of lawsuits against other pillars of the crypto industry, including Coinbase, Binance, and Tron.

Editor’s note: This story was updated after publication with additional information.

Edited by Andrew Hayward