Federal authorities have dismissed a cryptocurrency trading lawsuit against Cumberland DRW.
The legal dispute between Ripple Labs Inc. and the U.S. Securities and Exchange Commission (SEC) continues to make headlines in the cryptocurrency world. The case, which began in 2020, involves complex questions about the classification of XRP and institutional vs. retail sales, influenced by evolving regulatory stance under new SEC leadership.
In late 2019, Ripple CEO Brad Garlinghouse had a meeting with President Donald Trump prior to his inauguration, indicating a positive relationship between the firm and the crypto-friendly administration. However, the SEC accused Ripple of selling XRP tokens as unregistered securities since 2013, a claim that Ripple vehemently denies, arguing that XRP is not a security.
The SEC specifically named several other cryptocurrencies, including Polygon (MATIC), Solana (SOL), Cosmos (ATOM), Algorand (ALGO), and Filecoin (FIL), as assets involved in the case. Interestingly, the SEC has reached a preliminary agreement to drop its case against Cumberland DRW, the crypto trading arm of Chicago-based DRW, which was accused of operating as an unregistered securities dealer while handling over $2 billion in digital assets.
The delay in resolving the Ripple case may be attributed to the injunction included in Judge Analisa Torres' ruling. Under Federal Rule 60, a court ruling can only be changed if circumstances have significantly shifted. Drafting a carefully worded motion to dissolve the injunction takes time and requires the SEC to sign off on it. Once both parties agree, they dismiss their appeals, allowing Ripple to file a motion with the trial court.
However, Ripple only has one shot at getting the injunction dissolved with the trial court. If the SEC argues that its ongoing efforts to revise crypto regulations could make the injunction unnecessary, it could pose a challenge for Ripple. The challenge lies in the fact that the court's decision was based on the Howey test, a legal standard set by the U.S. Supreme Court, which SEC rule changes cannot override.
Jeremy Hogan, a partner at Hogan & Hogan and a prominent legal figure in the cryptocurrency sector, provided insights into the ongoing Ripple case. He predicted that a decision may come by May, though appeals could be dropped as early as April. However, the SEC's decision not to dismiss the Ripple case despite similar arguments for appeal in Ripple's case and Coinbase's interlocutory appeal raises questions about the SEC's approach and the future of the Ripple lawsuit.
As of January 31, 2025, there have been no new developments in the ongoing Ripple case. The agreement between the SEC and Cumberland DRW is pending final approval from the SEC. The outcome of this case could set a significant precedent for the future of cryptocurrency regulation in the United States.
In conclusion, the legal battle between Ripple and the SEC continues to unfold, with both parties presenting their arguments and awaiting a decision. The case, which has been ongoing for several years, could shape the future of cryptocurrency regulation in the United States.
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