Stuart Alderoty, Chief Legal Officer of Ripple, has announced the conclusion of the company’s protracted legal dispute with the U.S. Securities and Exchange Commission (SEC), marking a significant milestone for the company and XRP. He made this declaration on X to excited responses from the XRP community.
The United States District Court for the Southern District of New York (SDNY) has issued its final verdict in the Ripple vs. SEC case. Judge Analisa Torres, who presided over the lawsuit, delivered the long-awaited judgment on August 7, 2023. This ruling effectively terminates the legal uncertainties surrounding Ripple’s sales and use of XRP, a point of contention in the SEC’s allegations.
In her final decision, Judge Torres significantly reduced the financial penalty proposed by the SEC. The regulator initially requested $1.95 billion for Ripple’s violation of securities laws, but the judge reduced it to $125 million. Additionally, the court imposed restrictions on Ripple’s future XRP sales to institutional clients based in the U.S.
Implications of the Verdict
The conclusion of this case has far-reaching implications for the cryptocurrency sector. Ripple’s successful deployment of the fair notice defense strategy may set a precedent for other companies facing similar regulatory challenges. This defense argues that the SEC failed to provide adequate notice to the industry regarding the potential regulation of crypto assets like XRP under securities laws.
Alderoty emphasized that while Ripple’s case has concluded, the fair notice defense remains a viable option for other entities involved in SEC litigation. This suggests that the outcome of the Ripple case could influence future legal strategies in the cryptocurrency space.
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SEC’s Uncertain Stance on Crypto Assets
The SEC’s position on cryptocurrency regulation has been a subject of scrutiny throughout this legal battle. Alderoty drew attention to theSEC’s defense where it referenced its July 2017 DAO report, which stated that certain crypto asset securities fall under U.S. securities laws. However, recent developments have highlighted inconsistencies in the SEC’s approach.
Alderoty also noted that the SEC recently apologized to a federal judge for creating confusion with its use of the term “crypto asset securities.” This admission came as part of an amended motion in a separate lawsuit involving Binance.
The SEC clarified that the term does not inherently classify tokens as securities, but refers to the broader context of their distribution and sale. Alderoty has also previously criticized the SEC’s use of the “crypto asset securities” terminology.
While some in the crypto world believe the SEC might still appeal the ruling, Alderoty is convinced the legal battle at the federal level is over, and the majority of the community shares this belief.
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