After a lengthy legal struggle spanning over four years, a significant lawsuit involving a prominent crypto firm and the U.S. Securities and Exchange Commission (SEC) has reached its conclusion. The legal team associated with the crypto firm has decided to abandon its cross-appeal, which will culminate in the recovery of a $75 million refund from a previous ruling.
Though this outcome is seen as favorable, the market reaction has been tempered. The price of the firm’s digital currency, XRP, remained relatively stable, noting only minor fluctuations at $2.45 at the time the information was shared, despite a more notable 8% increase over the past week.
Both parties have agreed to cease their appeals. The SEC will no longer pursue its appeal, and similarly, the crypto company has chosen to drop its counter-appeal, which was pending in the U.S. Court of Appeals for the Second Circuit. The ruling made by the Southern District of New York in August 2024, which assessed a fine related to a prior case, remains active, holding the firm liable for a total of $125 million.
However, an important adjustment has been made wherein the SEC will only retain $50 million of this fine in escrow, with the crypto firm being entitled to reclaim the outstanding amount. Additionally, the SEC has indicated plans to petition the court to dissolve a previously imposed injunction, signaling a total resolution to the dispute.
It was emphasized that these arrangements are contingent upon final documentation, court approval, and a formal endorsement from the SEC commissioners. The announcement follows the previous declaration that the SEC’s decision to drop its appeal was indicative of a mutual agreement reached between the involved entities.
The SEC initiated its lawsuit against the crypto firm in December 2020, marking one of the most protracted enforcement actions against a major player within the U.S. cryptocurrency space. The Commission accused the firm of amassing $1.3 billion through the sale of XRP tokens without properly registering them as securities.
The drawn-out legal battle reportedly cost the company around $150 million in legal expenses, yet it inadvertently established a significant precedent within the cryptocurrency industry, as this case represented one of the few instances where a crypto entity successfully contested the SEC’s regulatory approaches on major legal questions.
This settlement may also hint at a broader shift in the SEC’s approach to cryptocurrency regulation. With the SEC’s withdrawal from the appeal and its settlement with the firm, attention is turning to the agency’s future regulatory strategies. Upcoming discussions in the Senate Banking Committee will involve evaluating the nomination of a former SEC Commissioner known for favorable views towards the industry, which may further influence regulatory policies.
As the crypto firm concludes its lengthy legal ordeal with the SEC, industry participants are vigilant about the potential changes in regulatory frameworks that could emerge under incoming leadership. The resolution of this case is not merely a win for the firm, but is being watched closely as a potential signal for future regulatory relations between crypto firms and government entities.