Ripple Labs has reached a settlement with the SEC, agreeing to pay a penalty of $125 million for selling its XRP token without proper registration.
This resolution concludes a legal conflict in which the SEC previously sought penalties amounting to over $2 billion. The settlement is considered a triumph for Ripple, as allegations of fraud were dropped, resulting in a diminished penalty.
The SEC initiated a legal action in 2020, alleging that Ripple unlawfully obtained funds by selling XRP without proper registration, contending that XRP should be categorized as a security.
On August 7, Judge Analisa Torres determined that Ripple’s activities did not amount to fraud, thereby substantially diminishing the SEC’s requests. In addition, the court has mandated Ripple to adhere to securities rules going forward, thereby offering some elucidation for the cryptocurrency industry regarding regulatory requirements for digital tokens.
Brad Garlinghouse, the CEO of Ripple, expressed contentment with the result, highlighting that the ruling enables Ripple to proceed with its activities while having a clear understanding of the regulatory framework.
Stuart Alderoty, the Chief Legal Officer of Ripple, recognized the $125 million penalty as a just settlement for previous transactions with knowledgeable third parties.
The resolution enhances comprehension of the potential regulation of digital tokens in the future, and the rejection of fraud allegations may impact the regulatory approach toward other crypto.
After the case has ended, Ripple is ready to explore growth prospects in the digital asset industry. It will use the clarity provided by the court order to expand its services and collaborations, particularly in places with favorable regulatory conditions.
