Ripple and SEC: A Legal Drama Concludes with a Whimsical Twist! 🎭

On the seventh day of August in the year of our Lord two thousand and twenty-five, the esteemed U.S. Securities and Exchange Commission, in a most unexpected turn of events, did announce the cessation of its protracted legal skirmish with the illustrious Ripple Labs. The parties, in a display of mutual understanding, did file a joint stipulation to dismiss their respective appeals in the Second Circuit, thus bringing an end to this rather theatrical affair.

The following opinion editorial was penned by Alex Forehand and Michael Handelsman for Kelman.Law.

A Quiet but Definitive Conclusion

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was not, in fact, a security when sold to the public on exchanges. However, Ripple’s cross-appeal, which sought to challenge the court’s assertion that its institutional sales were in violation of the Securities Act, was met with a rather stern countenance. Under the terms of this amicable agreement, each party shall bear its own legal fees and costs, a most civilized arrangement indeed. No further litigation is anticipated, much to the relief of all involved.

From Blockbuster Lawsuit to Settlement

It was in December of the year 2020 that the SEC first took up arms against Ripple, alleging that the company had conducted an unregistered securities offering by selling a staggering sum of over $1.3 billion worth of XRP. This case quickly became the talk of the town, with implications that reached far and wide, much like a scandalous novel that one cannot help but read.

In July of 2023, the esteemed Judge Analisa Torres delivered a landmark ruling: programmatic sales of XRP to retail buyers on digital exchanges did not constitute securities transactions. She found that such buyers lacked the requisite expectation of profits from Ripple’s managerial efforts-an essential element of the Howey test. However, the court did hold that Ripple’s direct sales to institutional investors were indeed unregistered securities offerings, resulting in a rather hefty fine of $125 million for Ripple. Oh, the irony!

While the decision was, in technical terms, a split outcome, it was widely regarded as a triumph for Ripple and the broader crypto industry. It was also the first major case to draw a legal distinction between secondary market token sales and direct offerings, a line that the SEC had previously refused to acknowledge, much to the chagrin of many.

A Strategic Retreat by Both Sides

Rather than continue the appellate litigation, both Ripple and the SEC, in a most gentlemanly fashion, chose to retreat. The joint dismissal reflects a mutual recognition that the time-and risk-of further proceedings was not worth the potential upside, which, let us be honest, was rather dubious.

In June, Ripple had already signaled its intent to withdraw its cross-appeal after reaching an agreement with the SEC on final remedies. This settlement included restrictions on future institutional sales and compliance measures, in addition to the monetary penalty. A most agreeable compromise, one might say!

The final act of this legal drama unfolded this week, with both parties requesting the dismissal of all outstanding appellate claims. With the case now closed, both sides may claim partial victories while avoiding the uncertainty of a drawn-out appellate fight, which, let us face it, is rarely a source of joy.

Implications for the Crypto Industry

Although this case did not produce Supreme Court precedent or final appellate rulings, the litigation-and particularly Judge Torres’s opinion-will likely influence how courts and regulators approach token classification in the future. It confirmed that not all crypto transactions fall under the securities umbrella, particularly in secondary markets where buyers are often as anonymous as a character in a gothic novel, blissfully unaware of the issuer’s identity, let alone any managerial promises.

This case also underscored the strategic limitations of regulation by enforcement. For all the SEC’s efforts to define the crypto industry through litigation, it now faces a growing patchwork of rulings that complicate its jurisdictional claims. Meanwhile, Congress continues to deliberate on legislation that could bring more clarity to the treatment of digital assets, a task that seems to be as elusive as a well-mannered suitor.

What Comes Next

With the Ripple case now officially closed, the company is free to move forward-both in the U.S. and abroad-without the overhang of federal securities litigation. The crypto industry, in turn, may view this outcome as a cautiously optimistic signal: that nuance matters, that courts may be more receptive to technological complexity than regulators have been, and that litigation, while costly, can yield meaningful boundaries in an otherwise uncertain landscape.

Ripple’s Chief Legal Officer, the esteemed Stuart Alderoty, marked the occasion with a brief statement on X:

“The end…and now back to business.”

For market participants navigating this evolving regulatory environment, the Ripple saga offers both a cautionary tale and a roadmap. Kelman PLLC continues to monitor developments in crypto regulation across jurisdictions and is available to advise clients navigating these evolving legal landscapes. For more information or to schedule a consultation, please contact us.

This article originally appeared at Kelman.law.

2025-08-09 13:16