The U.S. Securities and Exchange Commission (SEC) has dropped charges against two Ripple Labs executives in their case involving the violation of U.S. securities laws. Ripple's CEO, Brad Garlinghouse, and co-founder Chris Larsen, were accused of facilitating the unregistered sales of XRP, a cryptocurrency that a judge ruled was not considered a security. The SEC had filed the lawsuit in December 2020, alleging that Ripple had unlawfully raised over $1.3 billion through XRP sales.
U.S. District Judge Analisa Torres in Manhattan granted Ripple a partial victory in July by deeming XRP sales on public exchanges not as unregistered securities offerings. She also denied the SEC's request to appeal this decision but ruled partially in favor of the SEC, stating that the agency had demonstrated that the sales of XRP, totaling $728.9 million, to hedge funds and sophisticated buyers had violated the law.
The SEC's charges against Garlinghouse and Larsen, pertaining to their role in these sales, were set to go to trial before a jury, scheduled for April next year. It's worth noting that Ripple Labs, though named as a defendant in the case, was not part of the spring jury trial. The SEC's recent request for an interlocutory appeal was denied, along with the agency's motion to delay the trial's commencement.
In a Thursday filing, the SEC expressed its intention to discuss potential remedies against Ripple for Section 5 violations concerning its institutional sales of XRP. The two parties agreed on a November 9 deadline to propose a schedule, with the court stepping in if they cannot reach an agreement.
Ripple's Chief Legal Officer, Stuart Aldeorty, commented on the decision, asserting that the SEC made a grave mistake by pursuing personal charges against Brad & Chris, characterizing the withdrawal of charges as a surrender rather than a settlement.
Earlier this year, Judge Torres ruled that Ripple's programmatic sale of the XRP token did not qualify as an investment contract, dealing a blow to the SEC in its long-standing battle against the cryptocurrency company.
The legal dispute between the SEC and Ripple began when the agency filed its complaint against the company in December 2020. After this development, XRP's price surged rapidly in the late afternoon.