The Securities and Exchange Commission asked a federal judge in New York to dismiss its case against both the co-founder and chief executive of crypto firm Ripple.
The SEC and Ripple intend to meet about a briefing schedule for discussing “what remedies are proper against Ripple” for its violations tied to institutional sales of its XRP token, wrote attorneys for the SEC on Thursday.
Bloomberg Intelligence analyst Elliott Stein said the move allows the SEC to appeal the parts of the case it lost sooner than if it went to trial against the individuals. He also said the SEC likely “wanted to avoid bad facts coming out at trial of the individuals that could jeopardize the win the SEC got on direct institutional sales.”
Ripple characterized the regulator’s filing as a “stunning capitulation by the government,” according to a company press release. “This is not a settlement. This is a surrender by the SEC,” tweeted Stuart Alderoty, chief legal officer for the company.
The price of XRP rose as much as 6% to around 52 cents in New York.
The regulator accused co-founder Christian Larsen and Chief Executive Officer Bradley Garlinghouse of misleading investors in XRP token by selling more than $1 billion worth of it without registering them. A federal judge ruled that sales of Ripple’s XRP to the general public on exchanges didn’t amount to securities offerings.
The SEC under Chair Gary Gensler has taken a hard stance on crypto, claiming many products should be registered with the agency and moving forward with numerous enforcement actions against industry players. The pace of actions sped up in the wake of last year’s market rout and the collapse of FTX, with the SEC suing market leaders Coinbase Global Inc., and Binance Holdings among others.
The industry has responded by claiming the SEC is overreaching, a view that has been bolstered by recent rulings favoring crypto firms in suits involving the regulator, including July’s Ripple decision. Another setback for the SEC came when when an appeals court overturned its decision to block Grayscale Investments LLC’s proposed spot Bitcoin exchange-traded fund. The SEC last week said it won’t appeal that decision.
--With assistance from Olga Kharif.
(Updates with statement from the company)