The U.S. government’s agency called the Securities and Exchange Commission (SEC) has decided to drop its legal claims against two top executives from Ripple Labs, a company working with blockchain technology. They were accused of breaking U.S. financial laws. Specifically, the SEC had said that Ripple’s CEO, Brad Garlinghouse, and one of the company’s founders, Chris Larsen, helped in selling a type of digital money called XRP without following the necessary legal rules.
Back in December 2020, the SEC accused Ripple of collecting over $1.3 billion in a way that broke the rules because they didn’t properly register their XRP sales as financial investments.
However, in July, a judge in the U.S. District Court ruled that Ripple did not break the law by selling XRP on public trading platforms. The SEC wanted to challenge this decision in a higher court but was denied.
Still, the judge ruled in favor of the SEC in part. She agreed that Ripple’s sales of XRP to big financial companies and investors were against the law.
The SEC’s claims against Garlinghouse and Larsen regarding their involvement in these sales were going to be decided by a jury in a trial.
Garlinghouse and Larsen, who have been strongly critical of the SEC throughout this case, have released lengthy statements accusing the SEC of having a hidden agenda against the cryptocurrency industry.
The SEC has not given any comment on this latest development. According to the SEC, the next step in this legal case is for both sides to present their arguments to the judge about what kind of punishment Ripple should face.
This decision by the judge in July was unusual because it was a setback for the SEC, which has been trying to control the cryptocurrency industry for a long time.
The head of the SEC, Gary Gensler, has filed lawsuits against Binance, the world’s biggest cryptocurrency trading platform, and Coinbase, the largest one in the United States. Gensler believes that many digital assets, like cryptocurrencies, should be treated as financial securities and be subject to the SEC’s rules.
People in the cryptocurrency industry argue that the current financial laws in the U.S. don’t work well for cryptocurrencies and have been pushing for new regulations.