Former U.S. Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo, widely known as the “Crypto Dad” for his advocacy of blockchain technology, has suggested that the U.S. Securities and Exchange Commission (SEC) could drop its ongoing lawsuit against Ripple Labs under a more crypto-friendly administration.
The SEC filed a lawsuit against Ripple in late 2020, alleging that XRP was being sold as an unregistered security. However, in a landmark decision in July 2023, U.S. District Judge Analisa Torres delivered a mixed verdict. She determined that XRP sold to individual investors through exchanges did not constitute a security, while XRP sold in institutional offerings did.
The SEC sought a $2 billion penalty from Ripple, but the court imposed a reduced penalty of $125 million. Following the ruling, the SEC attempted to appeal, arguing that the decision was inconsistent with Supreme Court precedent. In October 2024, Judge Torres denied the appeal, stating that the regulator failed to demonstrate a significant difference of opinion. The SEC has since taken the case to the Second Circuit Court of Appeals.
When asked if the SEC would drop the case, Giancarlo said:
“I think they should quit… I'm willing to bet they will.”
He called the court's decisions a significant setback for the SEC and urged regulators to reconsider pursuing cases where they face losses at trial.
Giancarlo also noted the potential for a pro-crypto shift under President-elect Donald Trump that could impact the SEC’s stance on crypto regulation. He argued that such a political environment could encourage regulatory clarity and a lighter touch approach to digital assets, including XRP.
Giancarlo, who previously penned a legal analysis arguing that XRP is not a security, has become a leading advocate for clearer and more balanced cryptocurrency regulation. He said the Ripple case was a turning point for the industry and tested the limits of U.S. securities laws.
*This is not investment advice.