Ripple agrees to pay $50M fine and drop cross-appeal to settle SEC lawsuit
Ripple has agreed to pay the US Securities and Exchange Commission (SEC) a $50 million penalty and drop its cross-appeal in the regulators lawsuit.
In exchange, the SEC will ask for the lifting of an injunction that prohibits Ripple from selling XRP to institutions.
According to Ripples chief legal officer, Stuart Alderoty, the SEC will keep the amount out of the $125 million originally levied against the company. The remaining $75 million, held in an interest-bearing escrow account, will be returned to Ripple.
Alderoty described the agreement as likely the final update on the dispute, concluding a legal battle that began in December 2020. All terms remain subject to final Commission approval, court documentation, and standard judicial procedures.
The case was in an appeal phase after Judge Analisa Torres found that while XRP sales to retail investors on exchanges did not violate securities laws, institutional sales did meet the criteria for investment contracts under the Howey Test.
The judgment imposed financial penalties and a permanent injunction barring further institutional sales of XRP.
The market considered the courts partial ruling important, as it clarified that not all crypto asset sales automatically constitute securities transactions. Additionally, it introduced important legal nuance into ongoing debates about regulatory jurisdiction in the US.
Notably, the news did not seem to affect XRPs price. As of press time, the token is priced at $2.47, up 1% in the hourly timeframe, and does not differ from other major cryptos in the same period.
Ripple challenges injunction
According to reports that surfaced last week, the lawsuits conclusion depended mainly on Ripples objection to the injunction.
The firm maintained that accepting the prohibition could be interpreted as admitting wrongdoing, a position it sought to avoid given the broader implications for its operations and future fundraising efforts.
Legal analyst James Murphy, also known as MetaLawMan, previously speculated that the SEC would have accepted the original $125 million fine without further litigation. However, he assessed that Ripple appeared unwilling to concede to terms it viewed as inconsistent with evolving regulatory policy.
The firm argued that if the SEC, under new leadership, is reassessing the appropriateness of past crypto enforcement actions in favor of clearer regulation, then penalties imposed under prior interpretations should also be reconsidered.
Additionally, different reports suggested that the SEC was examining whether XRP could be viewed more like a commodity than a security. The agency was allegedly comparing XRPs profile to Ethereum (ETH).
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Text source: CryptoSlate
