SEC vs Ripple Lawsuit — Complete Timeline and Analysis by BitKan Insights
Ripple vs. SEC: The Ongoing Legal Battle Shaping the Future of Crypto Regulation
Ripple’s dispute with the US Securities and Exchange Commission (SEC) is far from over, and the case is seen as one of the benchmarks in the dispute between the crypto industry and the SEC over the definition of securities. As Congress still lacks crypto regulatory laws, these cases will provide an important reference for the US government to develop digital asset regulation.
Earlier, Ripple CEO Brad Garlinghouse said that the company has paid more than $200 million in legal fees. Meanwhile, Ripple said that nearly 90 per cent of its business is now conducted outside the US.
When District Judge Analisa Torres ruled partially in Ripple’s favour in July, some cryptocurrency experts saw it as a clear victory for Ripple.
As a result of the ruling, the price of XRP, the token used by Ripple for transactions on its network, soared.
However, the SEC, under the leadership of supervisor Gary Gensler, hasn’t let Ripple off the hook on this. since the bankruptcy of crypto exchange FTX last year, the agency has launched a string of enforcement actions against the entire crypto industry, including lawsuits filed against crypto exchanges Binance and Coinbase.
Last week, a judge denied the SEC’s request to appeal part of Ripple’s ruling. While the outcome of this one was a bit disappointing for the SEC, more pending parts of the case are still to unfold in the 2024 trial.
Ripple (XRP) Timeline:
Year 2004
The origins of Ripple can be traced back to 2004. At that time, Canadian programmer Ryan Fugger launched a peer-to-peer payment system called RipplePay. The system came out before the rise of blockchain technology and did not use cryptocurrencies, but rather based transactions on digitised IOUs or credits.
Year 2011
May: The real turning point came in 2011. At that time, cryptographer David Schwartz, Mt. Gox founder Jed McCaleb, and Arthur Britto, a former video game designer turned chief strategist, all became interested in Bitcoin. They decided to team up to build a more efficient system that didn’t rely on proof-of-work mining. At the 2011 Bitcointalk forum, McCaleb criticised the energy consumption problems associated with bitcoin mining.
Year 2012
June: Schwartz, McCaleb and Britto purchase the branding and naming rights to RipplePay, founded by Fugger, and subsequently rename it Ripple Labs and launch the XRP ledger.
August: Angel investor Chris Larsen joins Ripple and eventually becomes Ripple’s COO.
Ripple Labs then develops Ripple’s blockchain technology, which leads to the creation of RippleNet, a payment network.
Year 2013
April: Ripple raises $3.5 million from multiple investors. At the time, Ripple did not disclose the total amount of the funding.
July: McCaleb leaves Ripple to start a new project of his own.
Year 2014
February 18: Ripple Labs is ranked №50 on MIT Technology Review’s “50 Smartest Companies” list.
June: McCaleb founds Stellar, a competitor to Ripple, and is awarded 9 billion XRP for his early contributions to Ripple, which at the time had a market value of approximately $126 million.2021 As the price of XRP rises, it is revealed that McCaleb has sold his share for over $2 billion.
September: Ripple announces partnerships with CBW Bank and Cross River Bank, which Ripple says are the first U.S. banks to adopt Ripple’s open-source distributed transaction infrastructure.
Year 2015
April: Ripple welcomes former Yahoo COO Brad Garlinghouse, who also holds the COO position at Ripple. Upon assuming the role, Garlinghouse begins to market XRP to the industry, hoping that the cryptocurrency generation will be available to banks and financial institutions as a bridge currency and an alternative to SWIFT.
May: The US-based Financial Crimes Enforcement Network (FinCEN) fines Ripple Labs $700,000 for “the first-ever civil enforcement of a virtual currency exchanger”. The regulator accuses Ripple of willfully violating a number of regulations, such as selling cryptocurrencies without registering and failing to implement anti-money laundering measures.Ripple promptly pays the $450,000 fine and promises to pay the balance within 30 days.
October: Ripple Labs changes its name to Ripple.
In 2015, Ripple’s total lobbying expenditures in the U.S. reached $150,000, according to OpenSecrets.
Year 2016
June: Ripple receives a virtual currency licence from the New York State Department of Financial Services. The company name used for this licence application is XRP II LLC.
September: The company successfully completed its Series B funding round, raising $55 million. Investors who participated in this financing include Standard Chartered Bank, CME Group, and others.
Year 2017
September: blockchain startup R3 sues Ripple Labs over a contractual dispute. the point of contention between the two parties is that R3 is contractually entitled to purchase XRP at a significant discount until 2019, which Ripple’s CEO seeks to terminate. R3 has since been providing solutions for several central bank digital currency projects.
December: XRP’s price breaks the $1 mark, up a whopping 15,873% calculated from a $0.0063 rise on 1 January.
Ripple spent $50,000 on lobbying in 2017, according to OpenSecrets.
Year 2018
January: ripple says it has offered its xCurrent product to more than 100 financial institutions. xRP at one point overtook ethereum to become the second most popular cryptocurrency by market capitalisation after bitcoin.
September: Ripple and R3 end their contractual dispute with a closed-door settlement, with both sides keeping quiet about the outcome. But leaked documents from 2020 show that the two sides settled for more than $240 million.
Ripple spent $450,000 on lobbying in 2018, according to OpenSecrets.
Year 2019
June 17: Ripple announces a partnership with MoneyGram — one of the world’s largest international money transfer companies — MoneyGram will use Ripple’s xRapid product. This partnership ends in 2021.
December 16: The XRP price also plummeted, falling to $0.183 from its January 2018 all-time high of $3.32, due to the bear market.
Ripple spent $220,000 on lobbying in 2019, according to OpenSecrets.
Year 2020
September 24: The XRP Ledger (XRPL) Foundation is established as an independent non-profit entity to drive XRP on the ground. The foundation raises $6.5 million to create an XRP community fund and enhance infrastructure.
December 21: The SEC files a lawsuit against Ripple Labs, Garlinghouse and Larsen.The SEC claims Ripple violated the law by issuing unregistered securities. Garlinghouse denies the SEC’s allegations and says the company will take up legal arms. XRP falls from $0.58 to $0.21 following this news.
December 22: Judge Analisa Torres is assigned to the Ripple case.
December 28: Crypto exchange Coinbase takes down XRP due to lawsuits Coinbase’s chief legal officer Paul Grewal says Ripple’s lawsuit with the SEC is the most significant reason for XRP’s downgrade.
According to OpenSecrets, Ripple has $330,000 to spend on lobbying in 2020.
Year 2021
March 3: Garlinghouse and Larsen challenged the SEC’s approach, arguing that the agency did not give them fair notice of the classification of XRP as a security (Fair notice, translated: a notice or warning given to a person in advance of taking action so that they have sufficient time to react or make the necessary adjustments). . In their letter to the court, they say that the SEC has failed to provide clear guidance to crypto companies — a statement that was borrowed by many crypto executives over the next few years.
March 8: The SEC asks Judge Sarah Netburn to hold a hearing to address Ripple executives’ fair notice requirements and other matters.
March 22: Judge Netburn rules that XRP has value and utility, which separates it from cryptocurrencies like Bitcoin. The ruling is significant because it highlights the legal differences between cryptocurrencies and paves the way for future asset classification and enforcement actions.
April 13: SEC Commissioner Hester Peirce introduces Safe Harbor Proposal 2.0, which would grant crypto companies a three-year grace period to “exempt from the registration requirements of the federal securities laws” under “certain conditions” in order to facilitate the registration of cryptocurrencies. from the registration requirements of the federal securities laws” to facilitate the development and construction of utility or decentralised networks. She also said that Gensler’s appointment as the new SEC chairman was “the perfect time for the SEC to reconsider how it can responsibly modify its rules to accommodate this new technology”.
June 14: The court extends the disclosure deadline for the SEC to 31 August. The court had previously required the agency to disclose its internal policies on cryptocurrency trading, conflicts of interest and securities classification.
August 27: Ripple’s lawyers filed a motion asking the SEC to disclose its policies regarding cryptocurrency trading by its own employees. This motion was denied by the court in September.
October 15: In an effort to gather input from a wide range of people from the cryptocurrency and traditional finance sectors, the court establishes an expert consultation period to add to the understanding of the different perspectives on the case.
Ripple spends $1.12 million on lobbying in 2021, according to OpenSecrets.
Year 2022
September 17: With the court’s approval, the Chamber of Digital Commerce, a US-based crypto advocacy group, files its own amicus curiae brief. An amicus curiae brief is a written submission to the court by an individual or organisation that is not a party to the case. These individuals or organisations can present their own legal arguments and recommendations on a particular case in their submissions. The Chamber of Digital Commerce did not explicitly state which side it supported in its submission, but instead highlighted the ambiguity of digital asset laws.
October 31: Coinbase files an amicus curiae brief in federal court on behalf of Ripple Labs. in the brief, Coinbase raises the question of whether the SEC gave fair notice before taking enforcement action against Ripple. the brief also raises the question of whether the SEC gave fair notice of its decision to take enforcement action against Ripple. A few months later, in 2023, Coinbase will also face enforcement action by the SEC.
December 2: After the 30 November deadline, the SEC’s and Ripple Labs’ supporting statement documents are made public. The documents shed new light on the arguments and legal claims of both sides, with both the SEC and Ripple Labs urging Judge Torres to rule directly in their favour without taking the case to trial.
22 December: The SEC asks the court to prohibit the release of “Hinman documents” that Ripple Labs believes are relevant to the case, citing the sensitivity of the documents. The documents contain a draft of a 2018 speech by former SEC chief William Hinman, in which William Hinman stated that ethereum is not a security.
According to OpenSecrets, Ripple’s lobbying expenditures in 2022 were $1.08 million.
Year 2023
May 8: CEO Garlinghouse says Ripple has spent $200 million on the SEC case.
June 6: SEC files lawsuit against Coinbase in connection with illegal operation of exchanges and facilitation of trading in unregistered securities.
June 12: Hinman documents are made public. While these documents reveal Hinman’s previous comments, the release doesn’t stir up much water.
Ripple spent $480,000 on lobbying in the first half of 2023, according to OpenSecrets.
July 13: The SEC’s case against Ripple Labs sees a split in rulings, with Judge Torres ruling that Ripple’s public sales of XRP to exchanges are not illegal, while the offering of XRP to institutions is deemed illegal. Ultimately, the case will be tried by a jury. Following that ruling, Coinbase and other exchanges re-list XRP.
July 21: In another Terraform Labs case, a judge challenges the Torres ruling, and the SEC then hints at a possible appeal.
July 24: Sendi Young, head of Ripple’s UK and European operations, says the partial victory sets the stage for further international expansion.
August 7: Just because the presiding judge in the Terraform Labs case overruled Judge Torres doesn’t mean Ripple has lost the game, says former SEC litigation counsel Teresa Goody Guillén, a partner at the law firm BakerHostetler and former SEC litigation counsel: “The reasoning is simple: this court explicitly rejected the XRP ruling, and another court could just as easily have made a split decision.”
August 9: On the same day that Judge Torres set the trial schedule for the second quarter of 2024, the SEC announced that it would be appealing some of the rulings she made in July.
August 17: Ripple is one of the top crypto companies to spend the most on lobbying in the U.S. in 2023, the press reveals. The list also includes Binance, Coinbase and Crypto.com.
August 28: Ripple announces on X (formerly Twitter) that it will host a “community celebration” in New York City in September, with Garlinghouse tweeting, “As promised, it’s time for a real victory party.”
September 6: Media reports claim that Ripple has paid lobbying groups to try to influence US legislation by lobbying to make the Commodities and Futures Trading Commission (CFTC) the de facto US regulator of cryptocurrencies. Many crypto industry professionals believe that the CFTC is a friendlier regulator and takes a gentler approach to regulation than the SEC, and former FTX CEO Sam Bankman-Fried lobbied the CFTC to regulate cryptocurrencies before his exchange collapsed.
October 3: Torres rejects the SEC’s request for an appeal.
October 19: SEC withdraws all charges against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen, cancelling a trial scheduled for next year. the SEC said in the filing that the SEC and Ripple will meet on the remaining issues in the case — Ripple’s violations of Section 5 of the XRP Institutional Sales Act. XRP Institutional Sales Practices — meet and agree on a possible briefing schedule, aiming to propose such a schedule to the court by 9 November 2023, or, if the parties are unable to agree, to seek a briefing schedule from the court.
Conclusion
The article showcased the timeline of the lawsuit between Ripple and the U.S. Securities and Exchange Commission (SEC). With the SEC’s withdrawal and charges dropped, Ripple has seen some victories, but there are still outstanding issues that need to be resolved in future trials. This case is not only crucial for Ripple itself, but is seen as a benchmark for the crypto industry’s relationship with the SEC regarding the regulation of digital assets. With future trials and decisions, this case will provide an important reference for future digital asset regulation by the US government.
Going forward, investors and the crypto industry will need to continue to monitor developments in the Ripple case to see how it affects the regulatory and market landscape across the industry. In the meantime, the crypto industry is likely to face more challenges and changes on the regulatory front, so it is critical to remain vigilant and attentive with the market changes.
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