The long-standing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) marked its third anniversary on December 22. Since the initial lawsuit in 2020, the case has evolved into one of the most pivotal moments in the history of cryptocurrency regulation. At the heart of the dispute is a fundamental question: Is XRP a security?
Three years ago, the SEC filed charges against Ripple Labs, its CEO Brad Garlinghouse, and co-founder Christian Larsen, alleging that they conducted an unregistered securities offering through the sale of XRP tokens, raising over $1.3 billion. The SEC also claimed that Garlinghouse and Larsen personally profited by selling approximately $600 million worth of unregistered securities.
However, new revelations from Ripple’s legal team suggest that the path to litigation was not inevitable—and that a different outcome could have been possible under different circumstances.
SEC’s Settlement Offer: A Conditional Path to Compliance
On December 23, Ripple’s Chief Legal Officer, Stuart Alderoty, disclosed that prior to filing the lawsuit, the SEC proposed a settlement. The terms were clear: Ripple would have to publicly acknowledge XRP as a security and allow the market a short window to achieve compliance.
Ripple declined.
According to Alderoty, the company refused for two core reasons:
- XRP is not a security
- The SEC has failed to establish a clear regulatory framework for cryptocurrencies
“We believed then—and still believe now—that XRP is not a security. Accepting such a label would have set a dangerous precedent for the entire digital asset ecosystem,” Alderoty stated.
This decision positioned Ripple not just as a defendant, but as a standard-bearer for regulatory clarity in the crypto space. By rejecting the settlement, Ripple chose to challenge the SEC’s authority and interpretation of securities law as it applies to decentralized digital assets.
Why the SEC’s Approach Has Drawn Criticism
Despite having three years to provide clear guidance, the SEC has yet to issue comprehensive rules for cryptocurrency compliance. Instead, it has pursued an enforcement-first strategy—targeting major players like Binance and Coinbase with lawsuits based on retroactive interpretations of securities law.
Critics argue this approach creates uncertainty, discourages innovation, and places undue burden on companies trying to operate in good faith.
Legal expert Meta Law Man praised Ripple’s stance, saying:
“Few companies and executives have the courage to say no to bullies. Even fewer do so when the bully is the most powerful entity in the world—the U.S. government. Congratulations to Alderoty, Garlinghouse, and Larsen. This is a well-earned vindication.”
His comment underscores a growing sentiment: that Ripple’s resistance may have paved the way for broader industry protections.
Three Major Legal Wins for Ripple in 2025
Ripple’s steadfast position has yielded significant legal victories this year—each reinforcing the argument that XRP does not meet the definition of a security under U.S. law.
1. July 13: XRP Ruled Not a Security in Retail Sales
In a landmark summary judgment, Judge Analisa Torres ruled that XRP is not a security when sold in retail markets. This distinction hinged on the Howey Test, which determines whether an asset qualifies as an investment contract.
The court found that retail buyers of XRP did not have an expectation of profit derived from the efforts of Ripple or third parties—breaking a key prong of the Howey criteria.
2. October 4: SEC’s Interlocutory Appeal Denied
The SEC attempted to appeal parts of Judge Torres’ ruling before trial, seeking to overturn aspects related to institutional sales and programmatic transactions. However, on October 4, the court rejected this motion, preserving Ripple’s partial victory and limiting the scope of the SEC’s claims.
3. October 20: All Charges Dropped Against Garlinghouse and Larsen
In a major turning point, the SEC dismissed all charges against Ripple’s CEO and co-founder. This move significantly weakened the agency’s case and signaled internal reconsideration of its original allegations.
These outcomes have not only strengthened Ripple’s legal standing but also boosted market confidence in XRP as a legitimate digital currency.
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What These Wins Mean for Crypto Regulation
The ripple effects—pun intended—of this case extend far beyond one company or token. The rulings have set important precedents:
- Not all tokens are securities, even if issued by a centralized entity.
- Retail vs. institutional sales may be treated differently under securities law.
- Regulatory clarity must come before enforcement, or risk undermining innovation.
As of now, the final trial—originally scheduled for April 23, 2026—may no longer be necessary. With key charges dropped and core legal questions already answered, many analysts expect the case to conclude in Ripple’s favor without further proceedings.
Frequently Asked Questions (FAQ)
Q: Is XRP officially classified as a security in the U.S.?
A: No. As of 2025, U.S. courts have ruled that XRP is not a security in retail transactions. The classification remains unresolved for certain institutional sales, but enforcement actions have been dismissed.
Q: Why did Ripple refuse the SEC’s settlement offer?
A: Ripple refused because accepting XRP as a security would have set a harmful precedent for the entire crypto industry and validated an unclear regulatory framework.
Q: What impact did the court rulings have on XRP’s price?
A: Each major legal victory triggered significant price increases, reflecting renewed investor confidence and improved market sentiment.
Q: Could the SEC appeal again?
A: While possible, repeated unsuccessful appeals have weakened the SEC’s legal position. Future appeals would face high procedural and evidentiary hurdles.
Q: Does this case affect other cryptocurrencies?
A: Yes. The court’s application of the Howey Test provides guidance for evaluating whether other tokens qualify as securities—potentially influencing ongoing cases involving Ethereum, Cardano, and others.
Q: What’s next for Ripple after this legal battle?
A: With regulatory pressure easing, Ripple is expected to expand its cross-border payment solutions using blockchain technology and explore new markets for its On-Demand Liquidity (ODL) service.
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Core Keywords
- XRP
- SEC lawsuit
- Is XRP a security?
- Ripple vs SEC
- Cryptocurrency regulation
- Howey Test
- Digital asset compliance
- Judge Analisa Torres
Final Thoughts
Ripple’s three-year legal journey has become more than a corporate defense—it's a defining moment in the fight for clear, fair cryptocurrency regulation. By standing firm against pressure to concede, Ripple has helped shape a legal landscape where innovation can thrive without fear of arbitrary enforcement.
As courts continue to interpret decades-old securities laws in a digital context, cases like this will serve as critical reference points. For investors, developers, and regulators alike, the message is clear: clarity, consistency, and due process matter.
And for now, it appears justice—and logic—may finally be on Ripple’s side.