In a notable turn of events, Ripple announced that CEO Brad Garlinghouse and Executive Chairman Chris Larsen were cleared of all allegations lodged against them by the US Securities and Exchange Commission (SEC). The SEC has decided to dismiss the charges with prejudice, signaling a significant setback for the government agency.
This dismissal marks the third win in a row for Garlinghouse, Larsen, and Ripple. The streak began with the July 2023 summary judgment, which delivered the most crucial victory, stating, “XRP is not, in and of itself a security” and continued through October when the SEC’s plea for an interlocutory appeal was turned down.
Reflecting on the prolonged legal battle, Ripple CEO Brad Garlinghouse remarked, “For nearly three years, Chris and I have been the subject of baseless allegations from a rogue regulator with a political agenda. We look forward to the day this chapter is closed once and for all, now that the SEC has dropped the curtain on their absurd theatrics against Chris and me.”
Ripple’s Chief Legal Officer, Stuart Alderoty, weighed in on the recent decision via X (formerly Twitter): “The SEC made a serious mistake going after Brad & Chris personally – and now, they’ve capitulated, dismissing all charges against our executives. This is not a settlement. This is a surrender by the SEC.”
What’s Next For Ripple Vs. SEC?
Eleanor Terrett, FOX Business journalist, highlighted the implications of this dismissal on X: “The SEC’s case against Ripple’s Brad Garlinghouse and Chris Larsen has been DISMISSED after both parties agreed to it. This agreement effectively cancels the trial initially slated for April next year.”
Delving deeper into the future of the case, Terrett outlined: “Now that the SEC has dropped the charges against Garlinghouse and Larsen, we should anticipate further litigation in the penalty phase concerning Ripple‘s $700M+ of institutional sales.” Legal sources anticipate a significant tussle: while Ripple is poised to negotiate down the penalty, the SEC is likely to insist on a substantial sum, partly for symbolic victory.
Crucially, the SEC retains the option to appeal Judge Torres’s decision regarding the “programmatic sales” and “other distributions” of XRP. Despite an earlier denial for an interlocutory appeal by Torres, the SEC might consider an appeal following the penalty phase, introducing a potential twist in this legal saga.
Legal experts within the XRP community are deliberating if yesterday’s decision was a strategic move designed to expedite the appeal process against the summary judgment. Bill Morgan, a lawyer affiliated with the XRP community, reiterated attorney Jeremy Hogan’s prediction from early October.
Hogan had speculated that the SEC might want to settle out the individual defendants which “gets the SEC to an appellate court about 9-12 months faster and saves its resources (and face) by bypassing a very difficult and overreaching case.”
Morgan further clarified the imminent steps: Ripple and the SEC are to confer on a potential briefing schedule concerning remedies for Ripple’s violations related to XRP’s institutional sales. This proposed schedule is to be presented by both parties to Judge Torres by November 9.
In essence, while Ripple’s recent victories have bolstered its standing in the ongoing battle with the SEC, the journey is far from over. The forthcoming penalty negotiations and the possibility of an SEC appeal on specific points will be pivotal in shaping the future of this high-profile case.
At press time, XRP traded at $0.5137, up 6.3% in the last 24 hours.
Featured image from Gamma Law, chart from TradingView.com