Ripple, the issuer of XRP, has long been ensconced in a legal battle with the Securities and Exchange Commission over allegations of offering an unregistered security. However, it appears to have been let off lightly by paying a penalty of $125 million.
Ripple CEO Brad Garlinghouse declared the settlement a victory for his company:
“The SEC asked for $2B, and the Court reduced their demand by ~94%, recognizing that they had overplayed their hand. We respect the Court’s decision and have clarity to continue growing our company. This is a victory for Ripple, the industry and the rule of law. The SEC’s headwinds against the whole of the XRP community are gone.”
The SEC, under the leadership of Chairman Gary Gensler, has taken the approach that all digital assets are securities while ignoring there are nuances that do not necessarily align with securities laws crafted decades ago. The SEC has a good number of crypto scalps to brag about, many of which were blatant frauds, but it has failed to pursue a path for digital asset firms to operate without the fear of the Feds knocking on their door.
Some observers believe the Commission has missed an opportunity to redefine regulation while boosting consumer protection and encouraging innovation. Other major jurisdictions have taken a different approach that contrasts with the SEC’s monolithic enforcement-based regulation. Time will tell which side got it right. The SEC has yet to issue a statement on the legal outcome.
