U.S. Securities and Exchange Commission (SEC) is gearing up to drop its long-running lawsuit against Ripple Labs, a case that has gripped the cryptocurrency industry since December 2020. Sources close to the matter, including former SEC officials and crypto analysts, suggest the agency could be reevaluating its stance amid a changing regulatory landscape and political pressure. While no official confirmation has emerged, the speculation has reignited debate about the future of XRP and U.S. crypto regulation.
The SEC’s legal battle with Ripple centers on allegations that the company raised over $1.3 billion by selling XRP as an unregistered security. In July 2023, U.S. District Judge Analisa Torres delivered a split ruling: Ripple’s programmatic sales of XRP to retail investors via exchanges did not violate securities laws, but its direct sales to institutional investors did, resulting in a $125 million penalty in August 2024. The SEC appealed this decision in October 2024, filing its opening brief on January 15, 2025, while Ripple requested an April 16 deadline for its response. Yet, recent developments hint at a possible retreat.
A key shift came with the departure of SEC Chair Gary Gensler in January 2025, replaced by interim Chair Mark Uyeda, known for a more crypto-friendly approach. Under Gensler, the SEC pursued an aggressive enforcement strategy, targeting firms like Coinbase, Binance, and Kraken. Since his exit, the agency has dropped several high-profile cases—Coinbase on February 21, Cumberland on March 5, and investigations into Uniswap and Robinhood in February—prompting speculation that Ripple could be next. John Reed Stark, former SEC Office of Internet Enforcement Chief, suggested in late February that the Ripple appeal might be abandoned as part of a broader dismantling of the agency’s crypto enforcement program.
Adding fuel to the fire, journalist Eleanor Terrett reported on March 12 via X that “two well-placed sources” indicated the SEC v. Ripple case was “in the process of wrapping up and could be over soon.” Terrett noted delays might stem from Ripple’s legal team negotiating terms tied to the $125 million ruling, though no official filing has confirmed this. Posts on X from crypto enthusiasts and commentators, including Scott Melker and Anthony Scaramucci, have echoed this sentiment, claiming the case’s end is imminent. However, without SEC documentation, these remain unverified.
A Changing Tide
The timing aligns with broader shifts in U.S. crypto policy under President Donald Trump, who took office in January 2025. Trump’s administration has signaled a pro-crypto stance, evidenced by his Strategic Bitcoin Reserve executive order signed March 6 and a White House Crypto Summit held March 7. An executive order on March 11 also established federal oversight over agencies like the SEC, potentially curbing its autonomy. Ripple’s Chief Legal Officer Stuart Alderoty has expressed optimism, stating in February that the appeal might be dropped under new leadership, a view bolstered by the nomination of Paul Atkins—a critic of enforcement-heavy regulation—as SEC Chair, awaiting Senate confirmation.
The Stakes for Crypto
The Ripple case has long been a litmus test for U.S. crypto regulation. A resolution could clarify how digital assets are classified under the Howey Test, which determines if a transaction qualifies as a security. The SEC argues XRP buyers expected profits from Ripple’s efforts, while Ripple contends XRP is a currency, not an investment contract. Judge Torres’ ruling offered partial clarity, but the appeal’s outcome—or its dismissal—could set a lasting precedent.
Critics question the SEC’s persistence. Attorney John Deaton, representing XRP holders, noted in March that the case “challenges the SEC’s authority over digital assets more than any other,” suggesting the agency sees it as a must-win fight. Yet, with dropped cases piling up, some wonder if the SEC is prioritizing battles it can win—or avoiding those it might lose under appellate scrutiny.
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