The court battle over XRP continues to be in a stalemate, while seeking new developments in RWAs outside of the United States.

The big shots in the cryptocurrency circle often strive to be the first, but the first position that nobody wants is now held firmly by Ripple, the first company to be sued by the SEC for being considered a security. The court's ruling on the Ripple case will have a significant impact on the future classification of cryptocurrencies as "securities," making this lawsuit highly watched.

Historical Review: SEC Accuses Ripple of Violating 1933 Securities Act Registration Provisions

According to a public press release on the U.S. Securities and Exchange Commission (SEC) website, on December 22, 2020, the SEC officially filed a lawsuit against Ripple, along with its co-founders Christian Larsen and current CEO Bradley Garlinghouse, for issuing and raising $1.3 billion in unregistered "securities."

The lawsuit alleges that Ripple has been selling unregistered securities to U.S. and global investors since 2013, issuing the XRP digital asset and exchanging it for non-cash equivalents such as labor market rewards and market-making services. In addition to financing XRP sales, Larsen and Garlinghouse also conducted approximately $600 million in personal unregistered XRP sales. The complaint states that the defendants failed to register their XRP contracts and registration exemptions, thereby violating federal securities registration requirements.

The U.S. Securities and Exchange Commission filed the lawsuit in the Manhattan federal district court, accusing the defendants of violating the registration provisions of the 1933 Securities Act and seeking injunctive relief, disgorgement of pre-judgment interest, and civil penalties.

In response, Ripple has consistently emphasized "We are not securities, we are not," while the SEC has maintained its position that "You are securities, you are." Let's continue to follow the developments.

SEC Clamps Down on Ripple, Discrepancy in Fines

The SEC seeks to impose a $102 million fine on Ripple, significantly less than the nearly $2 billion fine initially sought in court, but Ripple argues that the fine should not exceed $10 million and cites the Terraform Labs settlement as a reason. The U.S. Securities and Exchange Commission rebuts this, stating that such a low penalty "would not serve the purposes of civil penalty laws."

RippleLabs criticizes the SEC for the $2 billion fine, citing the Terraform settlement case: a $10 million fine is just right

On June 14, the SEC wrote to Judge Analisa Torres of the district court, explaining, "Before considering the trial of this case in conjunction with the settlement of the Terraform Labs case, note that Ripple, unlike the company defendant, has filed for bankruptcy and ceased operations permanently." The SEC further explains that Terraform Labs agreed to burn all keys to the cryptographic assets "securities" and repay a large sum to "securities" investors, as well as remove two board members responsible for regulatory violations.

In contrast, the SEC emphasizes that Ripple does not agree to any repayment assistance to investors - in fact, Ripple does not agree to anything.

In simple terms, even if victims retrieve their investment amounts, the punishment for Ripple is still insufficient, and the "fines" will not go to the SEC.

Untangling and the Way Out: Ripple Partners with RWA Digital Asset Custodian Companies Outside the U.S.

Facing setbacks in the U.S., Ripple is actively shifting its focus to overseas development. Ripple has partnered with Archax, an asset trading platform, to introduce hundreds of millions of dollars in real-world RWA assets into the XRP ledger.

According to an official press release dated June 13, 2024, Ripple collaborated with Archax, the UK's first compliant regulated asset trading platform, broker, and custodian, to transfer millions of RWA to the XRP Ledger XRPL. The agreement was signed in 2022, the same year Archax collaborated with custodian company Metaco to provide digital asset custody services to clients. Metaco was acquired by Ripple in mid-2023.

Graham Rodford, CEO of Archax, stated: "There is clear real-world utility in use cases such as the tokenization of RWAs, in terms of operational efficiency, access to liquidity markets, and the inherent transparency of cryptocurrencies. Archax has already tokenized assets such as stocks, debt instruments, and money market funds. Financial institutions are now understanding this, and we are pleased to play our part in helping them adopt this technology by introducing their assets to XRPL."