Ripple vs SEC: The Longstanding Legal Battle That Changed Crypto
San Francisco, December 2020. As the city prepared for the holiday season, tension gripped Ripple’s headquarters. Phones rang nonstop. Legal teams scrambled. A single document upended years of negotiations and threw crypto regulation into chaos.
On this page
- Ripple vs SEC: The Regulator’s Crackdown and Crypto Company’s Fightback
- High Stakes: More Than Just One Company on the Line
- Ripple vs SEC: The Defendant Fights Back and Exposes Regulatory Double Standards
- Turning Point: A Historic Court Ruling
- SEC’s Last Stand: A Desperate Appeal
- The Future of Crypto Regulation
The U.S. Securities and Exchange Commission (SEC) filed its now-legendary lawsuit against Ripple. That December marked the beginning of the prolonged Ripple vs SEC legal battle.
The charges? The commission accused Ripple of selling XRP in an unregistered security offering, raising $1.3 billion.
For Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen, this wasn’t just a lawsuit; it was an all-out war. However, the SEC wasn’t simply going after one company. The commission aimed to reshape the entire crypto industry.
We knew we had a fight on our hands. But we weren’t going to back down,
recalls Brad Garlinghouse.
Ripple vs SEC: The Regulator’s Crackdown and Crypto Company’s Fightback
In its lawsuit filed on December 22, 2020, the SEC alleged that XRP qualified as a security. This meant that Ripple was required to register its XRP sales—otherwise, they were deemed illegal. Meanwhile, Bitcoin and Ethereum were spared from similar scrutiny, with the SEC specifically targeting Ripple.
However, Ripple refused to back down. This wasn’t just about XRP—it was a battle for the future of the entire crypto industry.
For years, the crypto industry has asked for clarity, and yesterday we heard ‘it is clear.’ That’s like an alcoholic saying, ‘I don’t have a problem,’
Brad Garlinghouse quipped sarcastically at the Aspen Security Forum in August 2021.
Ripple’s leadership pushed back, publicly framing the SEC as a rogue agency that relied on enforcement actions as a weapon rather than setting clear rules that businesses could follow without harming their operations.
High Stakes: More Than Just One Company on the Line
A loss for Ripple could have been catastrophic for the entire crypto market. But even before the case was decided, the SEC’s actions sent shockwaves through the industry almost immediately.
XRP’s price plunged over 50%, erasing billions in market value. Fearing their assets could be labeled unregistered securities, traders scrambled to sell off their holdings. Panic gripped investors as they watched their portfolios shrink by the hour.
Major crypto exchanges responded immediately. Coinbase, Binance, and other trading platforms suspended XRP trading, wary of potential regulatory penalties.
The impact of the SEC lawsuit against Ripple was devastating. If a well-established asset like XRP could be targeted, what was stopping regulators from going after other digital assets?
Despite the chaos, Ripple stood its ground. Garlinghouse and Larsen vowed to fight to the end—not just to defend their company, but to challenge what they saw as unfair and arbitrary regulation. The battle was only beginning.
Ripple vs SEC: The Defendant Fights Back and Exposes Regulatory Double Standards
As the SEC prepared to drag Ripple through a lengthy legal battle, the company turned the tables.
Ripple’s legal team demanded the release of internal SEC documents, including emails from former Director of Corporate Finance William Hinman. They believed these records would reveal regulatory inconsistencies.
And their discovery was explosive.
In internal emails related to his 2018 public speech, Hinman stated that Ethereum was not a security. This statement gave ETH legal clarity and strengthened its market position. Yet, when it came to XRP, the SEC took the exact opposite stance. But if Ethereum wasn’t considered a security, why was XRP treated differently?
The information Ripple uncovered became a key pillar of its defense. It exposed the SEC’s lack of clear legal standards, showing that its actions were arbitrary and inconsistent.
With this evidence, Ripple could now prove that the agency itself failed to establish a uniform framework for classifying cryptocurrencies.
Turning Point: A Historic Court Ruling
After nearly three years of legal battles, Ripple struck a decisive blow that sent shockwaves through the crypto industry.
On July 13, 2023, the long-awaited verdict was delivered. U.S. District Judge Analisa Torres ruled in a historic decision that programmatic sales of XRP (those conducted on public exchanges) were not securities transactions.
For Ripple, this was a significant victory. For the first time, a U.S. federal court officially ruled that a cryptocurrency traded on the secondary market does not qualify as a security.
The decision provided long-awaited clarity not just for Ripple, but also for crypto exchanges, investors, and developers across the industry. The court affirmed that tokens sold automatically on exchanges do not fall under the SEC’s jurisdiction.
However, Ripple’s victory was not absolute. The court also determined that institutional sales of XRP did meet the criteria of an investment contract.
As a result, Ripple was ordered to pay a $125 million fine and faced restrictions on future XRP sales to institutional investors.
While the company managed to protect retail investors, it couldn’t completely avoid regulation under securities laws.
Still, Brad Garlinghouse stood his ground.
They lost on everything that matters. Ripple, the crypto industry, and the rule of law have already prevailed,
he said.
SEC’s Last Stand: A Desperate Appeal
Refusing to concede defeat, the SEC filed an appeal on October 3, 2024, in an attempt to overturn the court’s ruling. The commission sought to reassert its control over the crypto market, but the landscape had already changed.
By early 2025, the political climate was shifting.
Gary Gensler, the SEC Chair and the architect of the “regulation by enforcement” approach, was preparing to step down—his tenure was set to end on January 20, 2025.
And Ripple seized the opportunity.
On January 14, 2025, Ripple’s legal team formally requested that the SEC put the appeal on hold until new leadership was appointed at the Commission.
We asked the SEC to agree to postpone their appeal deadline. They refused. What a waste of time and taxpayer dollars,
said Stuart Alderoty, Ripple’s Chief Legal Officer, expressing his frustration.
Garlinghouse didn’t hold back either:
Gensler, very much on brand—completely dismissive of the 2024 election and the American public—fully commits to his failed ‘regulation-by-enforcement’ agenda to the bitter, bitter end. #Sad.
Despite growing pressure, the SEC filed its appeal on January 15, 2025—just five days before Gary Gensler was set to leave office.
The Future of Crypto Regulation
As of March 2025, the SEC’s appeal is still ongoing. The legal proceedings could continue for up to a year, depending on how the new SEC leadership approaches crypto regulation.
But one thing is already clear: the Ripple vs SEC case has transformed the entire industry. The court’s ruling on XRP’s programmatic sales set a precedent that could shield other cryptocurrencies from similar lawsuits in the future.
XRP surged by several hundred percent, bringing long-awaited satisfaction to its long-term investors.
Exchanges, previously cautious due to potential SEC sanctions, are now confidently listing digital assets, supported by the favorable court ruling. Moreover, Brad Garlinghouse believes the introduction of a spot XRP ETF is now inevitable.
Meanwhile, crypto companies that once opted for quiet settlements with regulators are now following Ripple’s lead—more are choosing to fight back.
Still, uncertainty lingers. If the SEC wins its appeal, the crypto industry could face even tighter regulations. But if Ripple prevails, XRP (and potentially many other cryptocurrencies) could solidify their status as “non-securities.”
Ripple has become a symbol of resistance against regulatory overreach. However, the battle is far from over, and the entire crypto world is watching its outcome closely.
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