Ripple Labs has been locked in a legal battle with the U.S. Securities and Exchange Commission (SEC) since December 22, 2020. The SEC claimed Ripple sold XRP, its digital currency, as an unregistered security, raising over $1.3 billion. Ripple strongly denied these allegations, arguing that XRP should be classified as a digital currency instead of a security. The lawsuit originally focused on Ripple’s CEO Brad Garlinghouse and co-founder Christian Larsen.
Ripple Labs has been embroiled in a legal dispute with the SEC over the classification of XRP since December 2020.
In July 2023, Judge Analisa Torres issued a significant ruling. She decided that XRP is not a security when sold to retail customers but found that Ripple violated laws concerning institutional sales. This ruling led the SEC to appeal, claiming the court made mistakes in its decision. Ripple also filed a cross-appeal in October 2024. The SEC faced sanctions for misconduct during the discovery process, and in October 2023, the court denied the SEC’s request for an interlocutory appeal.
The ongoing lawsuit has had a strong impact on XRP’s value, causing billions in losses. Ripple faced a $125 million fine related to institutional sales violations. The entire crypto market suffered due to uncertainty from the lawsuit, leading to major price fluctuations for XRP. Additionally, the increasing discussions around tokenization and digital assets among financial institutions provide a broader context for Ripple’s legal outcome. The outcome of this case is particularly notable because it hinges on whether XRP qualifies as an investment contract under U.S. securities laws.
Recently, in March 2025, the SEC dropped its appeal, which marked a turning point in this case. This decision is seen as a historic win for Ripple and the broader crypto industry. Ripple is now considering its next steps regarding the remaining $125 million fine and an injunction against institutional sales. The announcement of the SEC’s withdrawal has led to a significant price increase for XRP, signaling positive market reactions.
Brad Garlinghouse, Ripple’s CEO, described the SEC’s decision to drop the appeal as overdue. The outcome sets an important precedent for cryptocurrency regulation in the United States and could influence international regulations as well.
