SEC and Ripple to wrap up years-long legal battle after dropping XRP appeals in Second Circuit

Key Takeaways

The SEC and Ripple have agreed to withdraw their appeals in the XRP litigation, ending a major phase of their legal battle.
The district court’s ruling that XRP sales on public exchanges are not securities transactions remains in effect.

The US Securities and Exchange Commission (SEC) and Ripple Labs have filed to dismiss their respective appeals in the long-running XRP case, a move that will formally close one of the highest-profile crypto enforcement actions in crypto history, the SEC announced Thursday.

In an Aug. 7 joint stipulation lodged in the US Court of Appeals for the Second Circuit, the two parties agreed to withdraw both the SEC’s appeal and Ripple’s cross-appeal.

Those filings followed a final judgment in the Southern District of New York imposing a $125 million civil penalty on Ripple. The SEC appealed the ruling to challenge Judge Analisa Torres’ finding that XRP sales on public exchanges and certain token distributions didn’t violate securities laws, while Ripple cross-appealed the court’s decision holding it liable for unregistered institutional sales.

The SEC said in a litigation release that the stipulation “resolves the Commission’s civil enforcement action” against Ripple and the two executives. The underlying district court judgment will remain in force, and no further litigation is pending in the case.

“Following the Commission’s vote today, the SEC and Ripple formally filed directly with the Second Circuit to dismiss their appeals,” said Stuart Alderoty, Chief Legal Officer of Ripple. “The end…and now back to business.”

What comes next?

Following today’s joint stipulation, the US Court of Appeals for the Second Circuit is expected to issue an order dismissing both the SEC’s appeal and Ripple’s cross-appeal, formally closing the appellate docket.

That leaves intact Judge Torres’ Southern District of New York judgment imposing a $125 million civil penalty on Ripple and permanently enjoining the company from violating the Securities Act registration provisions.

With no further appeals or modifications pending, the case moves into the enforcement phase, in which Ripple must pay the penalty within the required time frame and comply with the injunction’s terms.

Once payment is made and no motions remain, the district court will administratively close the matter, and the SEC will treat the enforcement action as resolved.