The United States (US) Securities and Exchange Commission (SEC) has chosen to abandon its pursuit of allegations against Ripple’s CEO, Brad Garlinghouse, and Executive Chairman, Chris Larsen, concerning their alleged involvement in aiding and abetting violations of federal securities laws in XRP transactions.
This significant development has prompted the cancellation of a trial that was slated for the upcoming year, marking yet another legal victory for the cryptocurrency company within the ongoing lawsuit brought forth by the regulatory agency.
Simultaneously, this shift in events edges the SEC closer to the potential prospect of appealing a federal judge’s rulling in this protracted case.
In accordance with the particulars outlined in a recent filling, both parties have agreed to the voluntary dismissal of the aiding and abetting charges against these two executives “with prejudice,” signifying that these specific claims cannot be resurrected.
Notably, the SEC will continue its pursuit of claims against Ripple, signalling that the legal contest is far from over.
“For nearly three years, Chris and I have been the subject of baseless allegations from a rogue regulator with a political agenda. Instead of looking for the criminals stealing customer funds on offshore exchanges that were courting political favour, the SEC went after the good guys.”
It is essential to recollect that back in July, a pivotal rulling by the overseeing judge determined that Ripple had not violated federal securities laws when it made XRP accessible to retail investors through its presence on various exchanges.
However, concurrently, the same rulling underscored that the company had, indeed, transgressed federal securities laws in its direct sales of XRP to institutional investors.
It is this latter facet that will continue to be at the centre of ongoing deliberations between the SEC and Ripple, as disclosed in the filling released on Thursday.
The now-dismissed charges specifically pertained to the institutional sales, which had been slated for trial proceedings next April.
The filling stated that:
“The SEC and Ripple intend to meet and confer on a potential briefing schedule with respect to the pending issue in the case – what remedies are proper against Ripple for its Section 5 violations with respect to its Institutional Sales of XRP.”
In response to these developments, Ripple issued a press release characterising the filling as a “surrender” and the SEC’s initial pursuit as “absurd theatrics.”
Notably, Ripple has noted a shifting landscape in its operations, with an increasing proportion — nearly 90% — of its business now transpiring outside US borders.
Katherine Kirkpatrick, Chief Legal Officer for Cboe Digital, offered an insightful perspective, suggesting that the SEC’s decision to drop the charges against the individuals may well be a strategic legal manoeuvre.