Ripple Labs, originally named OpenCoin, was founded to create a decentralized system for faster, cheaper transactions, bridging digital assets with mainstream finance using XRP. Unlike Bitcoin, Ripple employs a unique consensus algorithm relying on bank-controlled validators.
In 2020, the SEC sued Ripple, alleging XRP was an unregistered security. A court later ruled XRP was not a security for retail sales but found violations in institutional sales.
With a new crypto-friendly SEC administration, Ripple hopes for regulatory clarity and has urged the agency to drop the case initiated under former SEC Chair Jay Clayton.
SEC v. Ripple complete timeline
The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) began Dec. 22, 2020, when the SEC accused Ripple’s CEO Brad Garlinghouse and co-founder Chris Larsen of conducting an unregistered securities offering by selling XRP.
The SEC alleged that Ripple raised $1.3 billion through XRP sales, arguing that the company’s control over XRP’s supply and promotion met the Howey test criteria for a security. Ripple denied the allegations, asserting that XRP is a digital currency, not a security.
A key factor in the case was Ripple’s unique structure. Unlike decentralized cryptocurrencies like Bitcoin, Ripple operates a network of bank-controlled servers to validate transactions, and XRP’s entire 100 billion token supply was premined.
The SEC argued that Ripple’s ongoing control over XRP’s supply and active promotion of its value established XRP as a security, requiring proper registration.
On July 13, 2023, Judge Analisa Torres delivered a mixed ruling that provided regulatory clarity. The court determined that XRP itself is not inherently a security, offering relief to retail investors.
However, the judge ruled that Ripple’s institutional sales of XRP constituted securities transactions, highlighting the importance of how digital assets are marketed and sold.
Following this ruling, on Aug. 7, 2024, the court imposed a $125 million civil penalty on Ripple for its institutional sales violations. However, the SEC’s requests for disgorgement of profits and additional prejudgment interest were denied.
Additionally, Ripple was barred from violating securities laws in connection with future institutional sales.
This case marked a turning point in cryptocurrency regulation, setting a precedent for how digital assets are classified under U.S. securities law.
New SEC appeal
The legal battle escalated when both Ripple and the SEC filed appeals on Oct. 3, 2024, moving the case to the Second Circuit Court of Appeals.
In January 2025, the SEC submitted its opening brief, arguing that the district court erred in ruling that Ripple’s XRP sales failed to meet the Howey Test’s expectation-of-profits and investment-of-money requirements.
The agency seeks to overturn the ruling that XRP’s secondary market sales were not securities transactions.
Ripple’s Chief Legal Officer Stuart Alderoty dismissed the SEC’s arguments as repetitive and increasingly irrelevant amid shifting regulatory conditions. The company remains optimistic that the case could be dropped under the pro-crypto SEC leadership of acting Chair Mark Uyeda.
In response, Ripple filed a cross-appeal in October 2024, with an April 16, 2025, due date. The lawsuit, initiated by former SEC Chair Jay Clayton, has seen multiple setbacks for the agency. While the SEC continues its appeal, its commitment to pursuing the case remains uncertain.
At the core of the SEC’s appeal is its challenge to the district court’s decision, which classified Ripple’s institutional XRP sales as securities transactions but ruled that secondary market sales and XRP itself were not securities.
New hope
Republican SEC Commissioner Mark Uyeda has been appointed as the agency’s acting chairman. A strong critic of the SEC’s previous “regulation through enforcement” approach, Uyeda previously called it a “disaster” for the crypto industry. In December, he forecast a shift toward eased enforcement and greater regulatory clarity.
Ripple and the broader crypto industry are hopeful for a regulatory reset — one that prioritizes innovation over litigation. Ripple’s Chief Legal Officer Stuart Alderoty expects the new administration to drop the ongoing SEC appeal against the company and potentially halt enforcement actions against other major crypto firms.
Meanwhile, the SEC has launched a new crypto task force, led by Commissioner Hester Peirce, to develop a comprehensive regulatory framework for digital assets. This initiative has been widely welcomed by industry participants, who have long sought clear and consistent rules.
Alderoty emphasizes that non-fraud cases should be set aside in favor of constructive engagement. He urges swift resolution of lingering disputes to provide the industry with the clarity needed for sustainable growth.
Will SEC freeze Ripple case?
The SEC may be preparing to freeze non-fraud cryptocurrency cases currently in court, with some potentially being dropped, according to a recent Reuters report citing anonymous sources.
The agency is expected to begin overhauling its crypto policies as early as next week, following the departure of SEC Chair Gary Gensler.
Republican Commissioners Mark Uyeda and Hester Peirce are reportedly set to lead efforts in establishing clearer guidelines to determine whether a token qualifies as a security, a move that could bring much-needed regulatory clarity to the industry.
In a recent Fox Business interview, former CFTC Chairman Chris Giancarlo predicted that the SEC might drop its case against Ripple. When asked by reporter Charles Gasparino about the possibility, Giancarlo stated, “I would bet they would.” This follows the SEC’s notice of appeal in the ongoing case, alongside Ripple’s cross-appeal.
Implications for XRP price
Between 2012 and 2018, XRP underwent dramatic price changes. Initially valued at less than $0.01 in 2012, it saw minimal activity until Ripple Labs began forging partnerships with financial institutions between 2014 and 2016, though prices remained under $0.01.
The 2017 cryptocurrency boom marked a turning point, with XRP surging from $0.006 to over $1.00 by December, driven by growing interest in Ripple’s technology and speculative trading. In January 2018, XRP hit its all-time high of $3.84 during peak market enthusiasm.
However, the broader market crash that year saw XRP’s value plummet to $0.60 by February and stabilize around $0.30-$0.40 by year-end. This period underscored XRP’s growth and vulnerability to market trends and speculation.
The U.S. SEC’s legal complaint against Ripple in November 2020 caused XRP’s price to drop sharply from $0.70 to $0.20.
XRP experienced a significant price surge in 2021, but its momentum waned throughout 2022. By Nov. 30, 2024, XRP was trading at $1.94 per token.
On Nov. 16, the XRP price reached $1 for the first time since 2021. In addition, the market cap has surged 26.76% to $57.98 billion, while the trading volume has reached $13.13 billion.
With the new SEC commissioner, optimism is growing in the crypto sector. Many anticipate his successor will adopt a more favorable stance toward digital assets.
If historical fractals hold, XRP could aim to retest its 2018 peak of $3.41, with a longer-term projection targeting the 4.236 Fibonacci level around $13.93. Fundamentals further bolster the case for a sustained bull run, aligning with the technical outlook.
