Ripple Trial: Will the SEC Change its Assessment of XRP for a Settlement?

Ripple process: Does the SEC change its assessment of XRP for settlement?

Ripple’s legal dispute with the U.S. Securities and Exchange Commission (SEC) has been one of the best-known cases in crypto history since December 2020. The SEC sued Ripple founders Brad Garlinghouse and Chris Larsen with the accusation that the XRP cryptocurrency they developed in 2012 was a security. This legal opinion had been inconsistent until a landmark judgment in July 2023 stated XRP is not to be classified as a security. Both Ripple and the SEC celebrated this ruling as a victory, but the SEC subsequently appealed against the decision – this still needs to be decided upon.

Comments from Ripple on Friday now suggest that the SEC has recently sounded out in talks whether a major legal dispute might be settled with XRP as a security in future. Ripple’s chief legal officer, Stuart Alderoty, and even CEO Garlinghouse himself made corresponding statements in a live format at the Ripple swell conference.

These rumors are based on an appearance by SEC Chairman Gary Gensler before the U.S. House of Representatives at the end of September 2023. Gensler there assured that he did not see XRP as a security, at least for the past. However, Alderoty pointed out to “Cointelegraph” that Gensler deliberately left open the question of how XRP should be treated in the future. And Ripple’s CEO noted that his company might be open to a settlement with the SEC if the XRP issue is resolved.

A possible compromise could look like this: The SEC ultimately accepts that it will not be able to achieve any penalties or bans against Garlinghouse and Larsen, as initially demanded. In return, Ripple would not oppose further regulation of XRP, which could then be traded as a security on U.S. exchanges. It should be noted, however, that in July the judge rejected the request for the classification of XRP as a security in U.S. secondary market trading.

Conclusion: Ripple and SEC on reconciliatory course?

So far, both the SEC under Chairman Gensler and Ripple with its millions have shown themselves ready to fight in the courtroom. But in the face of Ripple’s constant victories in court, the SEC seems to have realized its position is weak toward XRP. Ripple’s management could doubtlessly also appreciate if future dealings with U.S. authorities for XRP would run smoothly. With this background, it should come as no surprise if Ripple and the SEC are indeed looking for ways to lay down arms by mutual agreement.