The Ripple Lawsuit: A Five-Year Saga

On December 22, 2020, Jay Clayton, then the chairman of the US Securities and Exchange Commission (SEC), authorized a lawsuit against Ripple, the company behind the XRP cryptocurrency. Clayton left the agency the next day, but his actions had a lasting impact on the cryptocurrency market.

The lawsuit claimed that Ripple had raised $1.3 billion through an unregistered securities offering going back to 2013. XRP’s price plummeted by around 60% in the following week, dropping to around $0.20. The bigger damage, however, came from the exchanges. U.S. platforms could only list securities if they registered as securities exchanges, so any platform still offering XRP would have been trading unregistered securities if the court sided with the SEC.

As a result, Bitstamp halted XRP trading for U.S. customers on January 8, 2021, followed by Binance.US on January 13, and Coinbase on January 19. Bittrex, Crypto.com, CrossTower, and Beaxy did the same, and Jump Trading and Galaxy Digital—two of the biggest trading desks in crypto—stopped making markets in the coin. Within a month, the third-largest cryptocurrency in the world was effectively locked out of the American market.

XRP stayed off those platforms for two and a half years. Coinbase only relisted it in July 2023, after Judge Analisa Torres ruled that XRP sold on public exchanges was not a security.

The Injunction on Ripple’s Institutional XRP Sales

Judge Analisa Torres found that Ripple’s direct sales to institutional buyers, worth $728.9 million across more than 80 buyers, were unregistered securities offerings. Her final judgment in August 2024 permanently barred the company from repeating them and imposed a $125 million civil penalty, which was well below the roughly $2 billion the SEC had asked for.

The SEC then changed its position. Under new leadership that had dropped most of its crypto enforcement, the agency joined Ripple in asking Torres to cut the penalty to $50 million and dissolve the injunction. She rejected that request on May 15, 2025, for failing to show exceptional circumstances, then rejected a second attempt on June 26, writing that the parties had no authority to agree not to be bound by a court’s final judgment.

So, Ripple and the SEC dropped their appeals at the Second Circuit on August 22, 2025, which left the judgment fully intact, including the injunction and a penalty larger than the one the company had negotiated.

The injunction does not stop Ripple selling XRP to institutions outright. It stops the company doing it without registering those sales with the SEC, and registering them would mean treating XRP as a security in exactly the transactions Ripple spent five years arguing were not securities sales. XRP sales made up most of Ripple’s revenue as recently as 2023, and the company’s U.S. institutional business now runs through the RLUSD stablecoin and the Ripple Prime brokerage instead.

What Would Finally Close the Ripple Case for XRP?

Nothing will remove the injunction now, so the only way it stops costing XRP anything is if the law changes around it. The CLARITY Act would make XRP a digital commodity under federal law, so Ripple’s sales to institutions would no longer count as securities transactions, and the injunction would have nothing left to stop.

But the bill has not moved. It has been on the Senate calendar since June 1 without reaching the floor, senators leave for recess on August 10, and Polymarket traders give it a 14% chance of becoming law this year.

XRP Spent the ETF Boom Stuck in Court

Spot Bitcoin ETFs started trading in January 2024 and spot Ethereum funds followed that July, while Ripple was still in court. No issuer could get an XRP fund approved while the SEC was arguing in open litigation that XRP was a security, so XRP ETFs could not launch until November 2025, months after the case closed.

Investors have put $51.3 billion into Bitcoin’s spot ETFs since launch, and those funds hold $76.3 billion today. Meanwhile, XRP’s funds have recorded $1.51 billion in cumulative flows and hold under $1 billion.