SEC and Ripple Close Book on 5-year Legal Battle
The landmark case concludes as both parties drop appeals, 2023 ruling stands
Welcome to the Friday edition of the Crypto In America newsletter!
What you’ll read: Two major crypto legal battles wrap up, over 100 stakeholders weigh in on market structure, plus this week’s top stories.
Wall Street’s top cop and blockchain payments firm Ripple have agreed to end their five-year legal battle, closing the book on one of crypto’s most high-profile courtroom dramas.
On Thursday, both parties jointly asked the Second Circuit Appeals Court to dismiss the Securities and Exchange Commission’s appeal and Ripple’s cross-appeal, each agreeing to cover their own legal fees.
“The end…and now back to business,” Ripple’s Chief Legal Officer said in an X post.
The case was brought in 2020 by then-SEC Chair Jay Clayton, who alleged that Ripple violated federal securities laws by selling XRP tokens to both institutional and retail investors.
In a 2023 ruling, SDNY Judge Analisa Torres found that XRP sold on public exchanges did not qualify as a security, but sales to institutional investors were unregistered securities offerings. Despite efforts by both the SEC and Ripple to overturn the ruling, Ripple remains responsible for a $125 million fine and an injunction.
This marks the SEC’s final major crypto case closed under its new pro-crypto chair, Paul Atkins, following the withdrawal of investigations and lawsuits against Coinbase, Kraken, Crypto.com, and other crypto firms that were initiated under former chair Gary Gensler.
The price of XRP jumped 5% following Thursday’s filing and is currently trading around $3.30.
Roman Storm Found Guilty on Money Transmitting Charge
Another major case that wrapped this week was the trial of Tornado Cash developer Roman Storm, who was found guilty by a Manhattan jury of conspiracy to operate an unlicensed money transmitting business — a charge that carries a maximum five-year prison term.
Storm, arrested in 2023, was accused of aiding hackers, including North Korea’s notorious Lazarus Group, in laundering over $1 billion in illicit funds through Tornado Cash, the privacy tool he helped develop.
After four days of deliberations following a three-week trial, the jury deadlocked on the two other charges: conspiracy to commit money laundering and conspiracy to violate international sanctions. It remains unclear whether the Department of Justice will seek to retry Storm on those counts.
SDNY Acting U.S. Attorney and former SEC Chair Jay Clayton released a statement following the verdict, praising the work of the DOJ and its partners in securing the conviction.
“The speed, efficiency, and functionality of stablecoins and other digital assets offer great promise, but that promise cannot be an excuse for criminality,” he said.
Many in the industry expressed disappointment with the verdict, saying it sets a dangerous precedent by holding software developers responsible for how bad actors use neutral code.
However, Storm remains optimistic. Following the verdict and Judge Failla’s decision to allow him to remain out on bail until sentencing, he told Crypto In America:
“It’s a big win. The ‘1960 charge’ is bullshit and we’re going to fight it all the way. You know how President Trump said ‘fight, fight, fight’? We’ll do that too.”
Storm’s legal team insists the ‘1960 charge’ — which refers to 18 U.S. Code section 1960 and criminalizes operating an unlicensed money transmitting business — is fundamentally flawed and vows to keep fighting the conviction.
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Senate Flooded with Feedback on Market Structure
Following Tuesday’s deadline for submitting feedback on the Senate Banking Committee’s market structure discussion draft, committee staffers now face a hefty workload.
A GOP staffer told Crypto In America the committee received responses from over 100 stakeholders on key topics including custody, trading, illicit finance, and federal versus state preemption.
The feedback will be considered as the committee drafts a bill it aims to introduce when it returns to Capitol Hill in September.
Weekly Recap
ICYMI. Here are the biggest news stories this week from the intersection of Washington and Web3:
The SEC and Ripple filed a joint motion to dismiss appeals, ending their nearly five-year legal battle over whether Ripple violated securities laws.
Roman Storm, a developer of crypto mixer Tornado Cash, was found guilty of operating an unlicensed money transmitting business.
President Trump picked pro-crypto economist Stephen Miran to temporarily fill a Federal Reserve Board seat as Adriana Kugler's resignation becomes effective today.
The SEC’s Division of Corporation Finance issued guidance stating that, in general, liquid staking activities and tokens are not considered securities.
Khurram Dara, a 36-year-old crypto lawyer, is preparing to seek the Republican nomination for New York Attorney General, setting up a potential challenge to Democratic incumbent Letitia James, 66.
The CFTC is seeking public feedback on an initiative to allow spot crypto trading on its regulated futures exchanges.
President Trump signed an executive order that will prevent the denial of banking services to lawful businesses and individuals, and another that will allow crypto to be included in retirement accounts.
SEC Commissioner Hester Peirce emphasized the importance of protecting financial privacy and the right to self-custody in crypto.
Figure Technology Solutions, a blockchain lender run by SoFi co-founder Mike Cagney, confirmed it confidentially filed draft IPO paperwork with the SEC.
Ripple is acquiring stablecoin platform Rail for $200 million to accelerate stablecoin adoption in cross-border payments.
The Winklevoss twins have invested bitcoin in American Bitcoin Corp., a mining firm partly owned by President Trump’s sons that is planning to go public via a merger with Gryphon Digital Mining.
The NYDFS ordered Paxos to pay $26.5 million and invest $22 million in compliance upgrades over due diligence and AML failures related to its former partner Binance.
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