In recent weeks, the Securities and Exchange Commission (SEC) has been on a dismissal spree. First Coinbase, then Consensys, Gemini and OpenSea. Yesterday, it was Kraken. One by one, virtually every high-profile enforcement action of the era of former SEC chair Gary Gensler has fallen.
This signals to the cryptocurrency industry that US President Donald Trump’s administration will not govern like the last. Indeed, Commissioner Hester Peirce, who is currently serving as head of the SEC’s Crypto Task Force, released a public statement explaining that the SEC would not be regulating by enforcement anymore:
“The decision by the previous Commission to shift this function to the Division of Enforcement by engaging in a large-scale regulation-by-enforcement initiative harmed the American public, adversely affected the industry, and impeded the ability of the Commission’s skilled and dedicated professional staff to use their expertise as it was intended to be used.”
One case, however, has been conspicuously absent from the bevy of dismissals — an awkward anomaly. That case, of course, is Ripple.
The origins of the Ripple case
The Ripple case is one of the oldest and most influential in crypto. Back in the 2010s, when crypto law was still young, the SEC was just dipping its toes into enforcement. It started with “The DAO Report,” a seminal document initially applying the now-famous Howey test to cryptocurrency.
Then, in December 2020, the Ripple complaint came as a shot across the bow of the crypto establishment. The allegation that Ripple’s sales of the token XRP was a “years-long unregistered offering of securities” would form the playbook for all subsequent SEC enforcement actions.
Ripple CEO Brad Garlinghouse’s response to the SEC’s complaint in Dec. 2020. Source: Brad Garlinghouse
It seems strange now, but the Ripple case preceded former President Joe Biden and Gensler. It came in the last months of the first Trump administration when Jay Clayton was still SEC chair. For a while, this made it an oddity. In the quaint pre-FTX days when Gensler was perceived as a “pro-crypto” commissioner, XRP remained an odd pariah for years. In regulatory limbo, the token was unavailable on many US centralized exchanges and so missed the boom years of 2021 and 2022.
As the first major crypto case, rulings in Ripple would be highly influential in the legal posture of the industry. Most notably, a 2023 summary judgment ruling in which Judge Analisa Torres granted the company a partial victory, holding that blind bid-ask sales of XRP did not constitute securities because “they did not derive [an expectation of profit]” from Ripple’s efforts [because buyers were not aware] that they were buying XRP from Ripple.”
At the time, this was seen as a major victory in cryptocurrency. The SEC tried to certify an interlocutory appeal and failed, and over the ensuing year, the case slowly wound down, culminating in a $125 million judgment against Ripple in August of last year.
Ultimately, the seminal cryptocurrency enforcement action was eclipsed in the public eye by higher-profile disputes with Coinbase, Uniswap and others. In one of the last acts of the outgoing Biden administration, the Gensler SEC appealed the Torres judgment on Jan. 15, 2025. Ripple, for its part, filed a notice of cross-appeal on Oct. 15, 2024, and has not yet filed an appeal.
Ripple aligns with White House
As of writing time, the Ripple case has been silent since Jan. 31, 2025. The SEC has methodically dismissed virtually every cryptocurrency action and investigation on its docket, yet Ripple has remained mysteriously stuck.
This is strange on several levels. For one, the arguments for appeal on Ripple are similar to those at issue in a parallel Coinbase interlocutory appeal that Southern District of New York Judge Katherine Polk Failla certified back in January. The SEC let that one go, dismissing the case on Feb. 27, 2025.
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Secondly, Ripple seems to be in the White House’s good graces. Ripple has publicly courted Trump’s favor in recent months. This included a meeting between Ripple CEO Brad Garlinghouse and Trump in Mar-a-Lago before his inauguration and a reported contribution of $5 million in XRP to Trump’s inauguration fund.
Garlinghouse and Trump at Mar-a-Lago in January with Ripple chief legal officer Stuart Alderoty. Source: Brad Garlinghouse
While it is impossible to know for sure, it does seem that these gestures have inspired warm feelings among the MAGA inner circle. In February, Trump’s son, Donald Trump Jr., followed Ripple on X. More recently, on March 2, Trump named XRP as one of five cryptocurrencies to be included in a Strategic Crypto Reserve.
Source: Donald Trump
In light of what is widely perceived as a clientelist White House, all of this suggests that Ripple should be first in line for SEC favor. Yet the case remains unresolved. What could possibly be happening?
Three reasons why the Ripple case may be ongoing
The truth of the Ripple mystery is that why the case is still pending is unknown. No SEC staff member or Ripple attorney has commented. However, there are a number of possible explanations worth considering.
Unlike Coinbase, which was still pending pre-dismissal, Ripple reached a final judgment. This means that if the SEC stopped fighting, the outcome would not be a Ripple victory but a $125 million fine and a five-year “bad actor” prohibition on security fundraising that Judge Torres imposed on Ripple.
This means that, in some sense, Ripple needs the case to continue to obtain a favorable ruling. While it is possible that it could convince the SEC to join it in seeking to vacate Torres’ judgment, it is not obvious that Torres would agree to do so.
James Murphy, a legal commentator, recently speculated as much:
“The Torres decision was unquestionably GREAT for $XRP holders, BUT The (a) finding of securities law violations and the (b) injunction (with attendant “bad boy” provisions) are not so great for Ripple,” Murphy said. “This is particularly true if Ripple is considering a future exempt securities offering or IPO.”
“I believe the SEC would have accepted a settlement—where both sides dismiss their appeals and the SEC takes the $125 million penalty—in a heartbeat. So, it makes sense (to me at least) that Ripple could be negotiating for a better deal than that.”
Ripple may be playing hardball, but would Trump allow the SEC to push back? Another riskier tactic would be for the parties to furtively agree to continue the matter on appeal, but with the SEC as a party in name only. The SEC could play dead at hearings, effectively improving Ripple’s odds of obtaining favorable judgment on appeal at the Second Circuit.
A similar tactic was famously used (though openly, not furtively) by the Justice Department during President Barack Obama’s term to facilitate appellate review of the Defense of Marriage Act (DOMA) in United States v. Windsor.
While potentially fitting some of the facts, this explanation is also incomplete. After all, the SEC could facilitate review without concurrently maintaining its appeal. If it was really trying to aid a Ripple legal victory, why not let its own appellant case drop? This approach would also risk an unfavorable result at the 2nd Circuit, which could leave Ripple no better off than it was in August.
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The final explanation that could make sense is that there are still voices at the SEC who care about their interpretation of the law and want to defend it. At the time of the Torres ruling, many practitioners believed it incorrectly applied to securities law. Cryptocurrency attorneys have come to embrace its logic, but it is clear that the SEC always saw it as a black spot on its litigation recordand fought hard to appeal it immediately.
Attorneys at the SEC choose that profession because they care about the integrity of US financial markets, and it is possible there are still voices within the Commission that believe allowing the Ripple ruling to go unchallenged will impair that mission.
Perhaps these voices are waiting for Paul Atkins, the incoming SEC chair, to be confirmed before making a definitive determination on the Ripple case.
Ultimately, this case is a vestige of an earlier era. While case law was once seen as a determinant of cryptocurrency tokens’ legal status, this may no longer be the case. The old rules were thrown out when Trump ascended to power again, and the new rules are yet to be written. The Ripple case will probably be dropped in the coming days as the SEC either works through its docket or the sides reach some agreement. Even if it continues to resolution, though, it is unlikely to impact enforcement over the next four years.
In the Trump era, regulation appears to be effected through dealmaking, not law.
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