The US Securities and Exchange Commission (SEC) has officially dropped its lawsuit against Ripple Labs, Inc., bringing an end to a legal battle that began in December 2020.
This decision marks a significant turning point for Ripple, as well as for the broader cryptocurrency industry, which has long awaited clarity on the regulatory status of digital assets.
The SEC initially filed its lawsuit against Ripple Labs, along with its CEO, Brad Garlinghouse, and co-founder, Chris Larsen, in December 2020. The agency alleged that Ripple had engaged in an unregistered securities offering by selling $XRP and raising $1.3 billion without the necessary regulatory approvals.
The key legal issue in the case revolved around whether $XRP should be classified as a security. If it were, it would have to comply with strict regulations under US securities laws.
Ripple, however, denied these allegations, arguing that $XRP is a digital currency, not a security, and should not be subject to such regulatory scrutiny.
Key developments in the legal battle
The lawsuit saw multiple twists and turns over the years. One of the most significant developments came in July 2023, when a district court issued a ruling that partially favored Ripple.
The court determined that $XRP was not a security when sold on public cryptocurrency exchanges. This was a major victory for Ripple and the crypto industry as a whole, as it suggested that many digital assets could escape securities classification.
However, the court also ruled that Ripple’s institutional sales of $XRP—direct sales to businesses and investors—could still be considered securities transactions, leading to a mixed outcome.
In August 2024, Ripple was ordered to pay a $125 million fine as a penalty for these institutional sales. This amount was significantly lower than the nearly $2 billion in fines that the SEC had originally sought.
The reduced penalty suggested that the court did not fully agree with the SEC’s argument that $XRP should have been regulated as a security in all instances.
As the legal battle continued, the SEC attempted to appeal the court’s decision in January 2025. However, after months of legal maneuvering, the agency has now chosen to abandon its appeal, effectively ending the lawsuit once and for all.
The decision represents a significant shift in the SEC’s approach to cryptocurrency regulation under the Trump administration.
The news that the SEC had dropped its lawsuit against Ripple had an immediate and positive impact on the cryptocurrency market.
Following the announcement, $XRP’s price surged by approximately 13%, reaching nearly $2.56. This sharp rise reflects renewed investor confidence in $XRP’s future now that the legal uncertainty surrounding it has been lifted.
The positive momentum was not limited to $XRP alone. The broader cryptocurrency market also experienced gains, with Bitcoin rising by 2.2% to reach $84,096 and Ethereum increasing by 6.6% to $2,031.
These price movements suggest that the resolution of the Ripple case has created a sense of optimism among crypto investors, who see it as a sign that regulatory pressure on digital assets may be easing.
A changing regulatory landscape
The SEC’s decision to drop its lawsuit against Ripple comes at a time when the regulatory environment for cryptocurrencies is shifting.
Under President Donald Trump’s administration, there has been a noticeable shift toward a more crypto-friendly approach. This contrasts with the previous administration’s stricter stance on digital assets.
In recent months, the Trump administration has taken several steps to ease regulations on cryptocurrencies. This includes dropping multiple lawsuits against crypto firms and establishing a government task force to study potential regulatory changes.
The administration has also introduced initiatives aimed at supporting the growth of the cryptocurrency market. One of the most significant moves has been the creation of a government reserve of Bitcoin, signalling a broader acceptance of digital assets within the financial system.
Reactions from Ripple’s leadership
Ripple’s executives have been vocal about their views on the lawsuit’s resolution. CEO Brad Garlinghouse has been particularly critical of the SEC’s handling of the case.
He argued that the agency overstepped its authority in pursuing the lawsuit and suggested that the outcome highlights the need for clearer regulations that foster innovation rather than stifle it.
Garlinghouse has also expressed optimism about the future of the cryptocurrency industry, especially given the changing regulatory landscape.
Although co-founder, Chris Larsen, has not made any detailed public statements following the lawsuit’s conclusion, he has played a crucial role in Ripple’s legal defense throughout the case.
His involvement in shaping Ripple’s strategy against the SEC’s claims has been significant.
What this means for the crypto industry?
The end of the SEC’s lawsuit against Ripple is being viewed as a major victory for the cryptocurrency industry. Many analysts believe that this outcome could set a precedent for how regulators approach digital assets in the future.
The ruling that $XRP is not a security when traded on public exchanges suggests that many other cryptocurrencies could benefit from a similar interpretation, reducing the risk of regulatory crackdowns.
Despite this legal victory, industry experts emphasise that the crypto sector still has a long way to go in terms of proving its real-world value.
While regulatory clarity is important, investors and businesses also want to see blockchain technology deliver on its promises of increased efficiency, security, and financial inclusion.
If the industry fails to demonstrate tangible benefits, it may struggle to maintain long-term investor confidence.
The SEC’s decision to drop its lawsuit against Ripple marks a turning point for both the company and the cryptocurrency market. It removes a significant legal barrier for Ripple, allowing the company to move forward without the looming threat of regulatory action.
The ruling also signals a broader shift in the US government’s approach to digital assets, with a move toward more supportive regulations rather than aggressive enforcement actions.
As the cryptocurrency industry continues to evolve, the focus will likely shift from legal battles to real-world adoption and innovation.
While regulatory clarity is an important step, the success of blockchain technology and digital currencies will ultimately depend on their ability to provide practical solutions and deliver meaningful economic value.
