- The U.S. SEC dropped charges against Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen related to aiding and abetting in violating federal securities laws.
- The dismissed charges have been dismissed with prejudice, meaning they cannot be refiled.
- The SEC will continue its legal battle against Ripple for the sale of its XRP
The U.S. Securities and Exchange Commission (SEC) has decided not to pursue claims that Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen aided and abetted the company in violating federal securities laws. The charges, which were scheduled to go to trial next year, have been dismissed with prejudice, meaning they cannot be refiled.
While dropping the charges against the executives, the SEC will continue its legal battle against Ripple itself over the sale of its XRP cryptocurrency. The agency alleges Ripple violated securities laws by selling XRP directly to institutional investors.
Ripple’s XRP lawsuit keeps dragging
The dismissed charges relate specifically to those institutional sales. Legal experts say the SEC’s move may be a tactic to speed up the appeal process after a partial loss in court this summer.
In July, the federal judge overseeing the case ruled that Ripple did not violate securities laws by making XRP available on crypto exchanges. However, she agreed with the SEC that selling XRP directly to institutions could be considered an unregistered securities offering.
Ripple executives cheered the latest development as a victory. “For nearly three years, Chris and I have been the subject of baseless allegations from a rogue regulator with a political agenda,” said CEO Brad Garlinghouse in a statement. “Instead of looking for the criminals stealing customer funds on offshore exchanges that were courting political favor, the SEC went after the good guys.”
By dropping the charges against the executives, legal experts say the SEC has cleared the way to move forward with appealing the partial loss without having to wait for the aiding and abetting trial to conclude next spring.
The dismissal is the latest setback for the SEC as it aggressively pursues crypto companies under the argument that most digital assets are unregistered securities. Federal judges have pushed back on that sweeping characterization, handing the agency several defeats in court.
With no clear crypto regulations from Congress, these legal battles are shaping how digital assets are classified and regulated in the U.S. Ripple says it now conducts nearly 90% of its business outside the country due to the cloudy regulatory environment.
The outcome of that appeal could have major implications for Ripple, the SEC, and the future of crypto regulation.