A federal judge has rejected a proposed $50 million settlement between Ripple Labs and the US Securities and Exchange Commission (SEC), citing jurisdictional and procedural issues in the case involving allegations of unregistered XRP sales.
A federal judge has rejected a proposed $50 million settlement between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), citing jurisdictional and procedural issues. The case, involving allegations of Ripple’s unregistered XRP sales, is currently under appeal.
The XRP case refers to a lawsuit filed by the US Securities and Exchange Commission (SEC) against Ripple Labs, Inc., the developer of the XRP cryptocurrency.
The SEC alleges that XRP is a security, subject to federal securities laws.
In December 2020, the lawsuit was filed, sparking controversy within the crypto community.
As of now, the case remains ongoing, with both parties presenting their arguments in court.
Background of the Case
The lawsuit, first filed in December 2020, accused Ripple of raising $1.3 billion through unregistered XRP sales. The ‘SEC alleges that Ripple failed to register its XRP sales as required by U.S. securities laws, which could result in significant penalties and fines.’ The SEC alleges that Ripple failed to register its XRP sales as required by U.S. securities laws, which could result in significant penalties and fines.
Ripple has maintained that it did comply with applicable laws and regulations. In a statement, the company’s Chief Legal Officer, ‘Stuart Alderoty,’ said that ‘nothing in today’s order changed Ripple’s wins’ and that the company is committed to resolving the case.
Ripple is a real-time gross settlement system (RTGS) developed by Ripple Labs Inc..
It enables fast and secure international money transfers using a decentralized network of servers.
Ripple's native cryptocurrency, XRP, facilitates transactions between banks and financial institutions.
The system uses a consensus protocol to validate transactions, ensuring the integrity of the network.
Ripple has partnered with several major banks and financial institutions worldwide, making it a prominent player in the digital payment industry.
Reasons for Rejection
U.S. District Judge Analisa Torres rejected the proposed settlement, citing procedural flaws with the joint request. The judge stated that the parties’ motion was not only outside her jurisdiction, as the case is currently on appeal, but also ‘procedurally improper.’ Even if the judge had authority to act, she wrote that the request failed to meet the standards required for modifying a final judgment.
The case is already under appeal, and the SEC’s motion appears to have been filed in an attempt to modify a previous ruling.
Next Steps
Ripple and the ‘SEC are fully in agreement to resolve this case and will revisit this issue with the Court, together.’ In a statement, Ripple’s Chief Legal Officer said that ‘Ripple and the SEC are fully in agreement to resolve this case and will revisit this issue with the Court, together.’
The Securities and Exchange Commission (SEC) is a US government agency responsible for regulating securities, exchanges, and financial institutions.
Established in 1934, the SEC's primary goal is to protect investors from fraudulent activities and ensure fair market practices.
With five main divisions, the SEC oversees corporate finance, investment management, trading and markets, enforcement, and economic and risk analysis.
The commission has the authority to investigate and prosecute securities law violations, imposing penalties on non-compliant entities.
The outcome of this case is significant for both parties. If successful, it could provide clarity on the application of U.S. securities laws to digital assets. However, if unsuccessful, it could result in penalties and fines that would be substantial.
For now, ‘Ripple remains committed to resolving the case and has expressed confidence in its ability to do so.’
