A Year in Review of the SEC’s Battle Against Ripple And What’s Next

As 2024 draws to a close, one of the most closely followed legal battles in the cryptocurrency world has continued to keep everyone on the edge, leaving a mark on Ripple Labs and the entire crypto industry. The SEC’s lawsuit against Ripple, alleging that the cryptocurrency XRP is an unregistered security, has been a long saga filled with twists, turns, and dramatic courtroom showdowns. Let’s look back at the major milestones of this battle, and where things stand heading into 2025.

The SEC’s Bold Move: XRP Declared an Unregistered Security

In late 2020, the U.S. Securities and Exchange Commission (SEC) dropped a bombshell on Ripple Labs – creators of the XRP cryptocurrency. The SEC accused Ripple of raising billions of dollars through unregistered XRP sales, claiming that XRP was a security akin to a stock like Apple or Tesla, rather than a decentralized digital asset like Bitcoin or Ethereum. This lawsuit quickly became one of the most watched cases in the crypto world, not just for Ripple’s future, but for the future of crypto regulation in the United States.

A Year of Legal Challenges and Small Wins for Ripple

Though the lawsuit’s origins go back to 2020, 2024 has been a pivotal year for Ripple as they continue to challenge the SEC’s claims in court. While the battle is ongoing, Ripple has secured some important legal victories, giving it a significant lead in the case. Here’s a month-by-month look at the key developments:

January: SEC Pushes for Financial Disclosure

The SEC’s aggressive legal stance continued into the new year. In January 2024, the SEC filed a motion to compel Ripple Labs to disclose financial documents related to XRP sales after the legal action was initiated in 2020. The request to reveal sensitive financial data was met with resistance from Ripple, which argued that such disclosure could harm its business interests and violate privacy.

February: A Legal Extension for Ripple

By February 2024, Ripple was granted an extension in its legal battle. Judge Analisa Torres, presiding over the case, agreed to extend the timeline for Ripple to provide detailed financial statements covering 2022-2023. This victory was significant for Ripple, as it bought them more time to prepare their defense.

March: SEC Seeks $2 Billion Penalty

In March 2024, the stakes were raised when the SEC pushed for an astonishing $2 billion in fines and penalties against Ripple for the alleged unregistered sales of XRP. This figure, disclosed by Ripple’s Chief Legal Officer, Stuart Alderoty, sent shockwaves through the crypto industry. Ripple, however, vehemently opposed the penalty, calling it disproportionate and unjustified.

April: Ripple Disputes the $2 Billion Fine

By April, Ripple doubled down on its defense, rejecting the SEC’s demand for the $2 billion fine. Ripple argued that the proposed penalties were extreme and didn’t align with the facts of the case. The dispute highlighted the growing divide between Ripple and the SEC and set the stage for a bitter legal showdown.

May: Tensions Over Business Dealings

In May 2024, tensions intensified when Ripple sought to seal exhibits related to its business dealings, particularly discounting details for major XRP buyers. The SEC, however, pushed back, claiming that transparency was essential to ensure fair judgment in the case. This dispute over confidentiality further complicated the already contentious legal battle.

June: Settlement Talks on the Horizon

By June, there were signs that a settlement could be on the horizon. Ripple filed a notice regarding the Terraform Labs settlement, which resulted in a $4.47 billion agreement. Ripple continued to advocate for a much smaller settlement, around $10 million, but the SEC demanded a much larger fine of $102.6 million related to XRP sales that were considered illegal under securities laws.

July: Major Legal Victory for Ripple

July 2024 marked a win for Ripple. A federal judge ruled that the sale of XRP on public exchanges did not violate securities laws, a major victory for Ripple and the broader cryptocurrency industry. However, the court also ruled that Ripple had violated securities law in its sales to institutional investors, like hedge funds, a decision that continued to leave the door open for future legal challenges.

August: A $125 Million Fine Instead of $2 Billion

In August 2024, Ripple saw another victory when Judge Torres ruled that the company would face a fine of $125 million, a far cry from the $2 billion the SEC had originally sought. This decision was a huge relief for Ripple, though it remained locked in a battle over penalties and other legal implications of the case.

October: The SEC Appeals

The battle took another turn in October when the SEC announced its decision to appeal a court ruling that restricted its ability to regulate the sales of XRP on public exchanges. The SEC argued that Judge Torres’ ruling, which determined that XRP’s public sales were not subject to investor protection laws, was a blow to the regulator’s authority over the crypto markets. The appeal was filed with the 2nd U.S. Circuit Court of Appeals, leaving the industry on edge as the case continued to unfold.

November: Trump Takes Over

In early November, the United States Court of Appeals for the Second Circuit ordered the SEC to submit its main brief by January 15, 2025. The SEC requested an extension, which Ripple is opposing. Ripple is pushing for the court to uphold Judge Torres’s earlier ruling that XRP is not a security under the Howey test, a significant win for the company.

November also saw a political shift, with Donald Trump’s re-election victory seen as a positive for the crypto industry. Many believe Trump’s win could influence future cryptocurrency regulations, including the ongoing Ripple case.

December: New Dates Revealed

In December, the legal battle intensified when plaintiff Bradley Sostack filed an appeal against rulings in Ripple’s favor. On December 23, 2024, the plaintiff was required to submit a mediation questionnaire, an important step in the legal process. Appeal transcripts are due by January 30, 2025, and Ripple must respond to the plaintiff by April 7, 2025.

What’s Next for Ripple and the SEC?

As we close out 2024, the Ripple-SEC saga remains unresolved. Ripple continues to make legal headway, securing smaller victories and defending itself against the SEC’s massive fines. The case is not just about Ripple’s future but the future of cryptocurrency regulation in the United States. With both sides digging in their heels, the battle is set to continue into 2025, and the cryptocurrency world will be watching closely to see whether Ripple can finally put the legal drama behind it – or if the SEC will manage to set a precedent for crypto regulation moving forward.