The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs and its two executives – CEO Brad Garlinghouse and Chairman Chris Larsen – for raising more than $1.3 billion in an unregistered sale of the XRP token, which the regulator deems to be a security. Ripple denies the charges, arguing that XRP is a commodity and not a security as the SEC mistakenly alleges.
This is expected to be a protracted case, and in between now and its conclusion, we expect several twists, turns, and sideshows.
This live blog follows the events that shape up this case. Who knows, this could be history in the making.
October 04: XRP holders can’t join SEC against Ripple case as defendants
XRP holders had earlier desired to join the SEC vs Ripple case as defendants. However, that is no longer possible. On Monday, U.S. District Judge Analisa Torres ruled that XRP token holders cannot act in Ripple’s ongoing lawsuit as defendants. The judge said allowing XRP holders to join the suit would compel the SEC to take an enforcement action against them. Furthermore, it would delay the case, which Ripple and token holders have urged for a quick resolution to.
September 21: Court denies Ripple’s request for SEC crypto trading disclosures
A United States magistrate judge has denied blockchain firm Ripple’s request to gain access to documents detailing the SEC’s crypto trading activity. Judge Sarah Netburn declined to grant the company access to documents that could indicate whether employees of the SEC have executed transactions in bitcoin, ether or XRP. The judge said “Defendants have not shown that such individual trading decisions bear on the issues in this case. Although the SEC’s policies (or absence of policies) may provide relevant evidence related to fair notice or recklessness, how an Ethics Counsel viewed a trading decision is more likely to cause confusion or create collateral litigation disputes.” Furthermore, the SEC protects employees’ privacy and revealing such information to Ripple violates their promise.
September 03: Ripple hands over 1 million slack messages to SEC
United States Magistrate Judge Sarah Netburn ordered Ripple to hand over 1 million missing Slack messages among employees that the Securities and Exchange Commission (SEC) had earlier sought to access. Ripple had complained that the move would cost at least $1 million but the judge considered the messages critical and unique evidence for the SEC’s ongoing case against the multi-billion-dollar company for selling XRP coins as unregistered securities
August 30: Ripple files motion to expose XRP holdings of SEC employees
Blockchain firm Ripple has filed a motion to compel the US SEC to disclose its internal cryptocurrency trading policies. This is part of the ongoing legal battle with the regulatory agency. Following the motion, the court had reportedly given the securities regulator until September 3 to respond to Ripple’s motion. The motion seeks to compel the Securities and Exchange Commission to provide anonymized documents showing trading preclearance decisions for XRP and other coins such as BTC and ETH.
August 09: SEC wants Ripple Employees’ Slack messages
The US SEC has asked the court to grant it access to Slack communications between Ripple’s employees. If approved, the regulatory agency would have access to over a million messages between the company’s employees. According to the SEC, the Slack messages that it managed to obtain contained some “critical” and “unique” evidence. The SEC said, “Had Ripple properly searched and produced all responsive Slack messages, the SEC would have almost certainly been able to refresh the recollection of other deponents.”
August 05: Ripple gains access to Binance’s documents
Ripple was granted access to Binance’s documents by U.S. Magistrate Judge Sarah Netburn after CEO Brad Garlinghouse filed a motion to obtain international discovery of Binance records. Garlinghouse sought the documents because he believes Binance possessed unique documents and information concerning Ripple’s ongoing case with the SEC. The records on the documents concern XRP transactions that were allegedly conducted by the CEO and may provide evidence that the Ripple executive made the transactions outside the jurisdiction of the regulatory agency.
July 15: Former SEC official to face questioning
A United States judge ordered William H. Hinman, the former chief of the commission’s corporate finance division, to make himself available for questioning in the ongoing case between the SEC and Ripple. Magistrate Judge Sarah Netbur said Hinman should be available for questioning since the case involves huge policy decisions in the financial markets and the public interest in the case is high. Ripple is still seeking answers as to why the regulator classified Bitcoin and Ether as commodities and tagged XRP as a security.
June 04: Ripple files motion seeking SEC to hand over documents on the ongoing case
Ripple has filed a motion requesting the US SEC to submit documents pertaining to the ongoing case. The blockchain firm wants to know why the SEC views XRP differently than Bitcoin and Ether. Ripple wants the SEC to produce two sets of documents it requested earlier this year.
June 03: Ripple seeks documents from 15 offshore exchanges
Ripple is seeking documents from 15 offshore cryptocurrency exchanges as it believes they would show that the company and its executives didn’t violate Section 5 of the Securities Act by selling XRP to the U.S. public. The company is seeking documents from iFinex, Bitforex, Bitrue Singapore, Bitstamp, Coinbene, HitBTC, Huobi Global, Bithumb, Bitlish, BitMart, AscendEX (formerly Bitmax), Korbit, OKEx, Upbit Singapore and ZB Network Technology.
May 30: Ripple stops SEC from gaining access to documents on its legal concerns about XRP
The US SEC thought that by obtaining the documents regarding Ripple’s concerns about XRP, it could use it in its favor. However, Ripple stopped the SEC from accessing the documents. The judge states that Ripple’s subjective beliefs are XRP are NOT relevant to the Fair Notice defense. Hence, the SEC was denied access to the documents.
May 26: Ripple waiting for SEC case to be over before going public: Garlinghouse
Ripple CEO Brad Garlinghouse confirmed that the blockchain firm would go public once it has settled its legal case with the US SEC. He said this during the ConsenSys 2021 event, adding that it is highly likely for Ripple to become a publicly listed company at some point.
May 1: SEC to file a response to Ripple’s Individual Motions to Dismiss.
The US SEC is expected to file a response to the blockchain company’s Individual Motions to Dismiss. The regulatory agency said the response would be up to 60 pages, and the Ripple executives’ lawyers don’t consent to this response. The SEC anticipates that Ripple and its executives will address their reasons for not consenting in a written opposition.
April 29: Ripple asks court to deny SEC’s appeal to withhold documents
Ripple’s lawyers had asked the court to deny an appeal from the SEC to withhold certain documents. The lawyers argued that the court already rejected the request, and the regulatory agency is required to submit the required files. The case continues as Ripple seems to be gaining ground.
April 29: Ripple wants to go public after SEC case: SBI CEO
The CEO of Japanese financial giant SBI Group Yoshitaka Kita said Ripple is planning to become a publicly-listed company after it concludes its ongoing case with the US Securities and Exchange Commission. Kita said Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen are currently working on taking the company public. However, he didn’t give a definite timeline for when that would happen. SBI is currently the largest outside-Ripple shareholder.
April 24: SEC asks court to deny Ripple request to stop talking to foreign regulators
The SEC had requested a judge to deny the recent motion filed by Ripple. The blockchain company filed a motion to stop the SEC from contacting regulatory agencies in other countries for discovery purposes. The request was addressed to U.S. Magistrate Hon. Sarah Netburn. Ripple argued that since 95% of its customers are outside the United States, maintaining its relationship with them and regulatory agencies in those countries is important. Hence, the reason why it wants to stop the SEC from contacting foreign regulators. However, the SEC argued that Ripple’s request lacks any legal authority on point.
April 21: New discovery conference set for April 30
A new discovery conference has been scheduled to take place on April 30. The conference will focus on the SEC’s attempts to contact and acquire documents from Ripple’s foreign regulators. The SEC intends to use the documents in its ongoing legal battle against Ripple Labs and its executives.
April 13: Ripple emerges victorious against Tetragon
Ripple’s winning streak continues after it won a case against Tetragon Financial Group. Tetragon sued Ripple to force the company to buyback $175 million in shares. The investment firm wanted to pull out due to Ripple’s legal trouble with the case. However, the Delaware Chancery Court sided with Ripple, saying the blockchain firm is not obliged to buy back the shares. This is the second victory for Ripple within a few days after a judge ruled against SEC’s demand for the personal financial records of the company’s executives.
April 9: Ripple Labs wins case against SEC related to personal financial records
The Securities and Exchange Commission lost a case against Ripple Labs as it sought the personal financial records of the company’s executives. Magistrates Judge Sarah Netburn ruled in favor of the Ripple execs, adding that the defendants won’t be required to submit their personal financial records. The SEC was asked to withdraw its Requests for Production, demanding the Individual Defendants’ personal financial records. The judge also asked the regulatory agency to withdraw its third-party subpoenas seeking the same records.
April 1: Garlinghouse slams SEC and hopes for a new administration
Ripple CEO Brad Garlinghouse slammed US SEC as the company continued its legal battle against the regulatory body. Garlinghouse said the lawsuit is an attack not only on Ripple but the entire cryptocurrency space. The CEO hopes the new administration can solve the issue and roll out favorable cryptocurrency regulations.
March 30: Judge allows XRP holders to intervene in SEC vs. Ripple case
A federal judge accepted a motion by XRP holders to intervene in the ongoing SEC vs. Ripple case. District Judge Analisa Torres said the XRP holders have until April 19 to file a motion to intervene in the case. The judge further gave two deadlines for the holders to file oppositions and responses for both the SEC and Ripple Labs. The XRP holders gained support from Ripple Labs executives Brad Garlinghouse and Christian Larsen, who are also defendants in this case.
March 18: SEC fights against Ripple’s order to stop financial records demand
The SEC pushed back against a demand by Ripple executives to stop the regulatory agency from obtaining their financial records. Two Ripple executives asked a federal court to stop the U.S. SEC from subpoenaing personal financial records. The executives argued that they had provided all the relevant financial information demanded by the SEC. However, collecting their personal financial records violates their privacy. The SEC argued that they need the records to properly track the movement of the XRP coins.
March 16: Ripple asks SEC to produce Bitcoin and Ethereum documents
Ripple filed a motion asking the US SEC to produce documents relating to Bitcoin and Ethereum. The company claims the two cryptocurrencies are similar to its XRP coin. Ripple lawyers argued that the regulatory body only produced documents for the company it intends to go after. This latest development shows Ripple is firmly standing its ground that XRP is not a security and is similar to BTC and ETH.
March 14: 6,000 XRP holders want to serve as third-party defendants in SEC lawsuit
More than 6,000 XRP token holders have volunteered to serve as third-party defendants in SEC’s lawsuit against Ripple. John Deaton of Deaton Law Firm filed the motion on behalf of the other token holders.
According to Deaton, the token holders’ interests are not being adequately represented in the SEC’s lawsuit against the blockchain company and its executives. Deaton and more than 6,000 other token holders have moved to intervene as third-party defendants. They claimed that they couldn’t rely on Ripple to protect the interest of the XRP holders. Hence, the need for them to enter the argument.
March 12: Ripple execs wants court to block SEC’s request for personal financial records
The SEC issued subpoenas to banks asking for the personal financial records of some of Ripple executives. However, Brad Garlinghouse and Chris Larsen said the subpoenas invaded their privacy and asked a court to block the SEC’s request.
The executives submitted a letter to the Southern District Court in New York asking Judge Sarah Netburn to block the subpoenas sent to various banks demanding eight years’ worth of their financial information. They claimed that their case with the SEC borders around the alleged sale of unregistered securities and not financial fraud. Hence, their personal financial lives are not relevant to the ongoing SEC case.
March 11: Ripple claims it never held an ICO
Ripple responded to SEC’s claim about an ICO. According to the blockchain payment company, it never held an ICO for the XRP tokens. Ripple has denied all the allegations made in the complaint by SEC. According to Ripple, the XRP coin served purposes that invalidates it as a security. Ripple claimed that the token functions as a medium of exchange. Hence the SEC has no authority to regulate it.
The company’s defense clearly states that XRP’s issuance wasn’t a sale of securities. Furthermore, Ripple claimed that categorizing XRP as a security would limit its various functions and compel thousands of exchanges, market-makers, and other actors to abide by complex legal processes.
March 4: SEC is picking crypto winners and losers
Ripple claimed that the Securities and Exchange Commission is picking winners and losers in the cryptocurrency space. According to the company, the SEC going after XRP as a security meant they are choosing the cryptocurrencies to favor. Ripple’s lawyers claimed that the SEC exempted Bitcoin and Ether from being regulated like stocks or bonds but considers XRP a security. Hence, indicating that they are showing favoritism in the cryptocurrency market.
March 4: Larsen files motion to dismiss SEC case
Ripple’s executive chairman Chris Larsen filed a motion with a U.S. court to dismiss SEC’s lawsuit alleging securities violations relating to sales of the coin. According to the legal letter submitted by his lawyers, Larsen informed Judge Analisa Torres at the U.S. District Court for the Southern District of New York that the SEC’s amended complaint is yet to state a claim against him.
The lawyers claimed that the SEC failed to show or prove that Larsen knew at the time that XRP were securities and the company’s activities were inappropriate. They highlighted that the Justice Department and FinCEN termed and regulated XRP as a virtual currency, which is inconsistent with SEC’s claims that the cryptocurrency was a security.
February 15: No prospects of a settlement
A joint letter submitted by both Ripple and the SEC to Federal Judge Torres indicates that the prospect for a settlement does not look likely at the moment.
“Counsel for the parties have met and conferred and, having previously discussed settlement, do not believe there is a prospect for settlement at this time,” said the letter.
The letter also notes that the previous settlement discussion took place under a previous administration.
There are prospects that there could be a change of heart and the “parties will promptly notify the Court if any settlement in principle is reached as to any Defendant.”
The matter will not be resolved until at least Aug. 16 this year when “all discovery shall be completed.”
January 29: Ripple files a court response to SEC’s lawsuit
Ripple files a court response to the ongoing lawsuit. The firm maintains its innocence and continues to argue that XRP is a virtual currency and not a security.
The court document, which mirrors the company’s Wells Submission, says that “XRP functions as a medium of exchange – a virtual currency used today in international and domestic transactions.”
Ripple further said that before this case, no other regulator in the world has ruled out that XRP is a security, and there is a good reason for that.
The response goes on to say that the U.S. Department of Justice (DoJ) and the FinCEN determined that XRP is a virtual currency that can be lawfully traded on the open market.
Ripple adds that the SEC filed the complaint 8 years after the creation of the XRP token, and during that time, allowed its open market to grow.
The firm accused the securities regulator of picking and favoring Bitcoin and Ether.
“The SEC’s filing, based on an overreaching legal theory, amounts to picking virtual currency winners and losers as the SEC has exempted bitcoin and ether from similar regulation.”
Ripple’s General Counsel tweeted that they are fighting for “everyone who has been hurt by the SEC’s filing.”
Today, we filed our preliminary legal response to the SEC’s complaint. With it, we start to set the record straight and correct many misconceptions and contradictions within their allegations. 1/5 https://t.co/8KVBuSzCGH
— Stuart Alderoty (@s_alderoty) January 29, 2021
January 15: Kraken suspends XRP markets for U.S. clients amid the Ripple/SEC case
Kraken is the latest cryptocurrency exchange to delist the XRP token from its platform. The exchange announced that it will be temporarily hating XRP trading for its U.S. clients on Jan. 29.
Customers are urged to exit their open XRP positions prior to the date. Kraken will make changes to this decision depending on new developments in the Ripple/SEC case.
Kraken’s U.S. clients can still deposit, hold, and withdraw XRP token even after the suspension date has passed.
However, clients from other countries are not affected by the latest announcement.
January 13: Japanese regulator says that XRP is not a security
Japan’s Financial Services Agency (FSA), the country’s securities regulator confirmed to The Block that XRP is not a security and deems it to be a cryptocurrency.
This is the first time that the regulator has publicly commented on the legal status of the embattled XRP token.
The FSA’s viewpoint does not have a bearing on how the U.S. Securities and Exchange Commission (SEC) proceeds with the case against Ripple. However, it indicates that there still lacks universal consensus in regulating tokens such as XRP.
Ripple CEO Brad Garlinghous has previously stated that the company is considering leaving the U.S. due to a lack of regulatory clarity. He shortlisted the U.K. as one of the possible destinations should the firm decide to move.
January 13: Grayscale dissolves XRP Trust
Grayscale, a leading digital asset manager and sponsor of the Grayscale XRP Trust announced that it is planning to dissolve the Trust. This decision comes shortly after the liquidation of its XRP positions from the Digital Large Cap Fund.
“In connection with the dissolution, the Sponsor has liquidated the Trust’s XRP and intends to distribute the net cash proceeds to Trust shareholders, after deducting expenses and providing appropriate reserves and subject to any applicable withholding. The Trust will terminate following distribution of the net cash proceeds,” said Grayscale.
January 12: UK-based crypto exchange Gatehub to continue supporting XRP
UK’s cryptocurrency exchange Gatehub has pledged to continue supporting XRP until Ripple’s legal battle with the SEC is completed or the exchange is served with a cease-and-desist notice.
“Please be advised that GateHub Ltd. will continue listing XRP until the SEC’s complaint against Ripple is adjudicated and a final decision entered that XRP is properly classified as a “security,” or until we receive a cease-and-desist notice from the SEC,” wrote Gatehub in a notice to XRP holders on its platform.
The exchange does not believe that the XRP token is a security under the Howey Test, but rather, considers it to be a utility token that derives its value from being used in payments and foreign exchange.
Gatehub argues that a distributed blockchain technology is used, meaning that the success of the XRP token is not tied to Ripple.
The exchange argued that if Ripple and its executives committed fraud, they should be prosecuted. However, this has nothing to do with the SEC classifying XRP as a security, and it could have dire consequences for innocent investors.
January 8: Ripple CEO addresses SEC lawsuit on Twitter
Ripple CEO Brad Garlinghouse took to Twitter to respond to a few select questions on the U.S. Securities and Exchange Commission (SEC) enforcement action against the blockchain firm. The SEC sued Ripple on Dec. 22 accusing the firm and its two executives – Garlinghouse and Chairman Chris Larsen – of improperly raising more than $1.3 billion in the sale of the XRP security token. Garlinghouse has publicly defended the company, claiming that the defendants are innocent because the SEC is “wrong on the facts, the law and equities.”
January 5: Grayscale dumps XRP holdings while Ripple faces lawsuit from one of their investors
Grayscale, Grayscale Investments, the world’s biggest cryptocurrency asset manager, has severed ties with the underfire XRP token. The asset manager announced that it has liquidated its XRP holdings and used the funds to buy more digital assets.
At the same time, Ripple who’s beng sued by the SEC faced more trouble. Tetragon Financial Group Ltd., a publicly-traded closed-ended investment company, filed a complaint under seal against Ripple in the wake of the U.S. Securities and Exchange Commission (SEC) taking legal action against the company for improperly raising more than $1.3 billion in an ongoing sale of XRP tokens. The lead investor in Ripple’s Series C funding round where the blockchain firm raised $200 million to value the company at $10 billion, is seeking to “enforce its contractual right to require Ripple to redeem” Series C preferred stock that the global investment firm holds
December 30: Coinbase sued, Binance.US delists XRP
A Coinbase customer sues the exchange for allowing the sale of XRP tokens and collecting a commission from trades. The plaintiff alleges that Coinbase knew that XRP was a security, and listed it anywhere, gaining an unfair advantage over its competitors.
Binance.US, announces that it will suspend XRP trading and withdrawals on January 13.
So far, the list of exchanges and services that have taken action against XRP is as follows:
Coinbase, Binance.US, Bittrex, Crypto.com, OKCoin, Zigulu, Wirex, Beaxy, Crosstower, Swipe Wallet, OSL, Bitwise, Jump Trading, and Galaxy Digital.
This list is expected to grow bigger with time.
December 29: Bittrex delists XRP, Pretrial conference date set
District Judge Analisa Torres set February 29, 2021, as the date for the initial pretrial conference. The conference will be attended telephonically due to the coronavirus pandemic and safety measures put in place. The plaintiff and defendants were ordered to submit a joint letter by February 15.
Another major exchange, Bittrex is set to remove the XRP book on January 15. The exchange does not give a specific reason for the suspension.
Litecoin’s market cap briefly surpasses XRP.
December 28: SBI pledges to continue supporting Ripple
SBI Holdings, one of Ripple’s major partners, issues a statement pledging its support for Ripple. However, the company said that it has invested in Ripple and not in XRP tokens. At the same time, it says that XRP is not considered a security in Japan.
Major U.S. exchange Coinbase announces plans to suspend XRP trading on January 19 due to the lawsuit.
The SEC officially unveils Elad L. Roisman as the Acting Chairman of the agency.
Cryptocurrency exchange OKCoin will suspend XRP trading and deposits effectively on January 4, 2021.
December 25: Bitstamp halts XRP trading for U.S. customers
Even the fortunes of Christmas Day were not enough to save XRP from delisting woes. XRP set to halt XRP trading for its U.S. customers on January 8, 2021.
December 24: Coinbase rumored to be weighing its options
U.S. cryptocurrency exchange Coinbase is believed to be weighing its options on delisting XRP.
MoneyGram, an international payments company with a commercial partnership with Ripple, distances itself from the underfire blockchain firm.
“As a reminder, MoneyGram does not utilize the ODL platform or RippleNet for direct transfers of consumer funds – digital or otherwise. Furthermore, MoneyGram is not a party to the SEC action,” the firm said in a press statement.
Ripple owns more than 4% of Moneygram’s shares.
December 23: Tether’s market cap eclipses XRP
Hong Kong’s regulated exchange, OSL suspends all XRP markets with immediate effect. CrossTower and Beaxy crypto exchanges have taken similar action. XRP is down more than 35% in 24 hours.
A cryptocurrency fund manager, Bitwise Asset Management, announces the liquidation of its position in XRP. Prior to the sale, XRP made up roughly 3.8% of the fund.
As XRP nosedives and its price sinks, so too does its market cap. The stablecoin Tether climbs into the third position as its market cap surpasses that of under-fire XRP.
Jay Clayton steps down as the Chairman of the SEC.
December 22: SEC files lawsuit against Ripple
The SEC files a lawsuit against Ripple and its two principals – Garlinghouse and Larsen – for raising over $1.3 billion through the sale of unregistered XRP tokens, which the regulator sees as a security. Ripple is accused of promoting the XRP token to finance its business operations.
Following the announcement of the complaint action, XRP goes into freefall.
Ripple faces an impending SEC lawsuit
Ripple Labs submits a Wells submission as it expects a lawsuit from the SEC. An entity being investigated by the SEC can submit its side of the story through a Wells submission before a lawsuit is filed. Ripple argues that its affiliated XRP token is not an investment contract, claiming that the SEC is wrong on the facts, the law and the equities.
Ripple takes aim at Bitcoin and Ether, asserting that the two leading digital assets are controlled by China. Ethereum co-creator, Vitalik Buterin, hits back and calls XRP a shitcoin.
Garlinghouse fires salvo at the SEC, especially outgoing Chairman Jay Clayton, accusing him of limiting U.S. innovation in the crypto industry and picking winners in his final act as the head of the agency.