The US Securities and Exchange Commission and Ripple Labs have agreed to drop their appeals in their ongoing court case, ending a major legal dispute in the cryptocurrency sector.

This means Judge Analisa Torres’ July 2023 ruling remains in effect.

The ruling found that Ripple’s XRP sales to institutional investors were unlawful securities sales, but secondary market sales to retail investors were not.

Both parties will cover their own legal costs and fees.

Ripple Labs is a blockchain company based in California known for its XRP cryptocurrency.

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🔗 Source: The Block

🧠 Food for thought

1️⃣ SEC enforcement strategy shows pragmatic shift toward negotiated resolutions

The Ripple case demonstrates how regulatory agencies are increasingly willing to accept partial victories rather than pursue lengthy appeals with uncertain outcomes.

The SEC originally sought $2 billion in penalties when it filed the lawsuit in December 2020, but ultimately accepted just $125 million in the final settlement—a 94% reduction from its initial demand 1, 2.

This reflects a broader shift in SEC enforcement strategy, where the agency appears more focused on establishing regulatory precedents and securing compliance than maximizing penalties.

The decision to jointly dismiss appeals with Ripple, rather than continuing to fight Judge Torres’ mixed ruling, suggests the SEC recognized the value of the partial win it achieved regarding institutional sales.

By accepting the compromise, the SEC avoided the risk of a Second Circuit ruling that could have been even less favorable to its position on cryptocurrency regulation.

2️⃣ Legal clarity creates immediate market value through uncertainty reduction

The 7% XRP price jump following the appeals dismissal demonstrates how regulatory uncertainty acts as a persistent drag on asset valuations, even when fundamental business prospects remain strong.

This case established a practical framework that distinguishes between different types of cryptocurrency sales—ruling that XRP sales on public exchanges aren’t securities while institutional sales are 1, 3.

The framework provides other cryptocurrency projects with a potential roadmap for structuring their token distributions to avoid securities violations.

Judge Torres’ 2023 ruling now stands as final precedent, giving market participants concrete guidance about how similar cases might be resolved in the future.

The immediate price response shows how quickly markets capitalize on uncertainty premiums when legal risks are definitively resolved, even in cases where the underlying business fundamentals haven’t changed.

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