The U.S. Securities and Exchange Commission (SEC) has issued a significant waiver, effectively removing Ripple's 'bad actor' disqualification and substantially easing its private fundraising capabilities. This decision marks a pivotal moment, as companies labeled 'bad actors' due to securities law violations are typically barred from utilizing Rule 506 exemptions under Regulation D. These exemptions are crucial, allowing companies, including cryptocurrency startups, to secure unlimited funds from accredited investors without the demanding and lengthy SEC registration process, thereby saving considerable time and legal expenses. For Ripple, this 'bad actor' tag, stemming from a permanent injunction imposed by Judge Analisa Torres, had previously blocked its easiest fundraising path for five years. With the SEC's waiver, Ripple can now bypass this considerable financial roadblock.

This development follows the formal conclusion of the long-standing legal case between the SEC and enterprise blockchain company Ripple, alongside its executives Brad Garlinghouse and Chris Larsen. Ripple's chief legal officer, Stuart Alderoty, confirmed the company is 'back to business' after the joint dismissal of appeals by both parties. As reported, Ripple had agreed to withdraw its cross-appeal against the SEC in late June, subsequent to Judge Analisa Torres's rejection of a motion to amend her final ruling, which was made in accordance with the settlement terms reached in late March. The settlement included a $125 million civil fine for Ripple and a permanent injunction prohibiting institutional XRP sales within the U.S. The community had anticipated the SEC would inform the U.S. Court of Appeals for the Second Circuit of its intention to drop the case before a scheduled status report in mid-August.

The legal saga began in December 2020 when the SEC, under former Chair Jay Clayton, accused Ripple of selling unregistered securities. Despite initial hopes that crypto-savvy Chair Gary Gensler might intervene, his agency intensified its 'regulation by enforcement' approach. After numerous twists and turns, Ripple emerged partially victorious in July 2023, with District Judge Analisa Torres ruling that secondary XRP sales were not securities. However, in August 2024, Judge Torres issued her final judgment, imposing the $125 million fine and the injunction on institutional XRP sales in the U.S. The case appeared to be resolved, but Gensler's SEC filed an appeal in October, promptly followed by Ripple's cross-appeal. The long-awaited resolution arrived after Gensler's departure in January; Ripple and the SEC reached a settlement agreement aiming to reduce the penalty and remove the injunction, though Judge Torres ultimately refused to modify the final ruling. Ripple then withdrew its cross-appeal, and the SEC reciprocated earlier this August, officially bringing an end to the grueling four-year legal battle.

SEC officials have reacted to the resolution with forward-looking statements. Paul Atkins, SEC Chair, commented that with 'this chapter closed, we now have an opportunity to shift our energy from the courtroom to the policy drafting table.' Commissioner Hester Peirce also stressed that the agency, 'once occupied with litigation, now can concentrate on creating a clear regulatory framework for crypto.' David Schwartz, Ripple's chief technology officer, humorously reacted to these post-lawsuit statements by SEC officials, sharing a GIF from a British comedy sketch from 'Monty Python's Flying Circus,' implying a sense of relief and celebration.

In terms of market reaction, XRP's price initially saw a significant spike, nearing 9% and reaching $3.38 on Binance, its highest level since July 23, and up over 24% from its local bottom on August 3. This surge was notably driven by strong buying pressure from South Korean traders. However, such news-driven rallies often dissipate, and indeed, despite the optimistic comments from SEC officials, XRP experienced a subsequent plunge of 4% on a later day, underperforming other major altcoins and changing hands at $3.15, as reported by CoinGecko data. Speculation also surrounds asset management giant BlackRock's potential filing for a spot XRP ETF. Analyst Nate Geraci posited that BlackRock might have been awaiting the SEC's appeal withdrawal against Ripple before making a move, though Bloomberg's leading ETF expert, Eric Balchunas, disputes this notion.