XRP Case Nears End as SEC and Ripple Seek Fund Release

The XRP lawsuit that has entangled Ripple Labs and the United States Securities and Exchange Commission since December 2020 is now approaching its conclusion. After years of legal back-and-forth, both parties appear to be taking the final procedural steps. On May 29, Ripple and the SEC jointly submitted a proposed final judgment to the presiding court, outlining a resolution.

As the XRP case nears its end, the SEC and Ripple have moved to release $125 million held in escrow. This particular sum was set aside to cover any potential judgments and financial penalties resulting from the outcome of the lawsuit. With the major legal hurdles now resolved and liability established, both sides are indicating that there’s no further need to hold the funds.

The submitted court filing highlighted that Ripple had already paid its required penalties and disgorgements under an earlier agreement. The escrowed funds, they argue, were initially held as a precautionary measure in anticipation of any future ruling. Now that the litigation is effectively closing, the funds are being considered surplus and could be returned to Ripple’s control.

The XRP lawsuit originally stemmed from the SEC’s allegation that Ripple had conducted an unregistered securities offering via the institutional sales of XRP tokens. Ripple strongly contested these accusations, asserting that XRP should not be classified as a security. Over the years, various rulings and summaries have been issued by the court, gradually shaping the outcome of the case.

In July 2023, the court ruled that the programmatic sales of XRP through exchanges did not constitute the sale of securities — a major legal win for Ripple. However, institutional sales were deemed to fall under securities transactions. As a result, Ripple was ordered to pay civil penalties, the total of which was significantly less than originally sought by the SEC.

According to the joint motion filed recently, Ripple has already fulfilled these legal obligations. The two parties, therefore, agree that the funds held in escrow are no longer required and should be released. The motion also includes stipulations about case closure procedures and administrative responsibilities going forward.

The XRP community and legal observers have closely followed this case due to its potential implications for the broader cryptocurrency industry. The ruling serves as a significant benchmark in defining how digital assets are treated under existing U.S. securities laws. Analysts suggest that the near-final resolution of this lawsuit may offer clarity for other blockchain-based projects navigating regulatory scrutiny.

Throughout the duration of the XRP case, Ripple’s executives maintained that the technology company’s role in facilitating cross-border payments through the XRP Ledger was fundamentally distinct from a securities issuer. The case’s dwindling trajectory now strengthens Ripple’s position as it looks to resume broader business expansion without the cloud of extended litigation.

Once the escrowed funds are officially released, Ripple is expected to reallocate them toward operational and strategic initiatives. The reintroduction of this capital may support Ripple’s ongoing partnerships and technological developments within the blockchain and digital finance sector.

While regulatory uncertainty continues to affect the crypto environment, the final chapters of the XRP case may mark a pivotal moment in shaping legal standards around token issuance and crypto platform regulation in the United States.

Related: Expert Advice: Sell XRP If You’re Confused

This lengthy legal saga has underscored the pressing need for clear digital asset legislation. As Ripple and the SEC prepare to close one of the industry’s most closely watched legal disputes, the outcome could establish important precedents for how decentralized projects and cryptocurrencies are governed in the years ahead.