09.08.2025 11:18

The Securities and Exchange Commission (SEC) has lifted its "bad actor" designation against Ripple Labs, paving the way for the cryptocurrency firm to secure private funding. This significant development follows closely on the heels of the SEC and Ripple's recently concluded, five-year legal battle.

The SEC's decision, announced on August 8th, was a direct response to the settlement and the subsequent need to remove the disqualification. Considering the circumstances, including the SEC's desire for a swift resolution of the lawsuit and the dissolution of the resulting injunction, the Commission invoked Rule 506(d)(2)(ii) of the Securities Act, citing "good cause" for granting this exemption. This action effectively negates the consequences of the original 2020 lawsuit, which alleged violations of Section 5 of the Securities Act.

Initially, the SEC's action in 2020 triggered the "bad actor" designation. A district court ruling found that Ripple's sale of XRP to private investors constituted unregistered securities, leading to an injunction halting such activities. While the parties settled their dispute in May 2025, the judge's refusal to dissolve the injunction necessitated the SEC's intervention with a waiver, restoring Ripple to its pre-litigation status.

According to prominent XRP attorney and former US Senate candidate John Deaton, this SEC waiver allows Ripple to resume operations as if the lengthy legal battle never occurred. He hailed the decision as the final, crucial piece of the Ripple-SEC settlement puzzle, stating that Ripple can now freely pursue private capital raising, effectively returning the company to business as usual.