The US Securities and Exchange Commission (SEC) retracted its lawsuit against Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen on Thursday, a move Ripple termed as a “stunning capitulation”.
Both executives, along with Ripple, were accused of violating securities laws through the sale of the XRP token. News of the SEC’s decision led to a 5% increase in XRP’s price.
Late in 2020, the executives and Ripple were charged for allegedly distributing the cryptocurrency XRP in violation of securities laws. In July, a federal judge ruled that Ripple’s XRP sales on exchanges were not securities offerings, marking a significant win for Ripple.
In a statement, Larsen criticized the SEC’s “ill-advised attack” and questioned the motivations behind the lawsuit.
While it’s unclear why the SEC dropped charges against Garlinghouse and Larsen, the decision may be a result of recent court losses against Ripple. The SEC, however, did not respond to Decrypt’s request for comment.
Despite this, the SEC continues its overarching case against Ripple, a case that may determine the future of crypto regulation in the US. Ripple’s legal fight has gained the support of major crypto industry players, including Coinbase Inc.
While Ripple’s recent legal victories have encouraged the industry, and the crypto market surged $73.5 billion in value following Ripple’s favorable July ruling, the company and the crypto ecosystem are not yet in the clear.
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