The legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple 
$1 continues, with the potential for a $125 million penalty remaining intact. Legal expert Fred Rispoli noted that the SEC may maintain its current stance. The case centers on whether XRP is classified as a security, and the slow progress of the proceedings complicates strategic payment options for Ripple. Discussions are further fueled by Judge Analisa Torres’ 2023 decision, which imposed restrictions on Ripple’s institutional XRP sales.
SEC’s Firm Stance in the Ripple Case
While the SEC withdraws from other cases within the cryptocurrency sector, it aggressively pursues its legal proceedings against Ripple. Speculation suggests that the agency is awaiting a new leadership appointment, which could affect the final decision. Rispoli emphasized the risk of SEC employees feeling their efforts are in vain, potentially harming internal morale due to the relentless pursuit of the case.
The SEC’s primary argument asserts that Ripple’s XRP sales violate security regulations. However, Judge Torres’ ruling last year indicated that individual sales could not be categorized under this framework. The SEC’s appeal is currently under review by the Second Circuit Court, with expectations that the process may extend into 2025 as deadlines for final defenses have been set.
Legal Status of XRP and Sale Restrictions
Ripple is fighting to lift restrictions governing its institutional XRP sales, aiming to minimize their market impact. However, the SEC counters that these sales conflict with investor protection policies, intensifying the legal battle. Experts suggest that a clear judicial decision regarding XRP’s status could set a precedent for the industry.
David Schwartz, Ripple’s Chief Technology Officer, addressed concerns regarding XRP supply. He clarified that the current code does not contain a function to increase token supply, stating, “The 37.1 billion XRP reserve is managed through control mechanisms.” Meanwhile, the possibility of Ripple paying the penalty with digital assets is being discussed, but Rispoli indicated that the sluggish pace of the proceedings makes this unlikely.
