SEC Veteran Clarifies XRP Retail Trading Status During Ripple Case

More than five years after it was initially filed, the Ripple lawsuit initiated by the SEC remains in the spotlight, with discussions still surrounding it.

The Securities and Exchange Commission sued Ripple Labs in December 2020, claiming it broke the law when it raised money by selling $XRP without registering it as a security.

In July 2023, Judge Torres decided that $XRP was not a security in itself, a ruling hailed as a major victory for the industry. In her ruling, Judge Torres also noted that the case did not include any claims of fraud and denied the SEC’s bid for Ripple to disgorge profits from its sales.

The lawsuit saw a successful resolution in 2025, with Ripple paying $125 million penalty, a fraction of SEC's claim, as the agency had sought almost $2 billion in penalties.

Retail $XRP trading rights were never restricted

Fast forward to 2026, and the Securities and Exchange Commission issued long-awaited guidance on Tuesday, a key step forward laying out which types of digital assets it deems to be securities.

The Ripple lawsuit came into discussion with former SEC official Marc Fagel responding to a question as to why former SEC Chair Gary Gensler never once tried to appeal to retail investors in the Ripple case. "Why did he not fight for Ripple equity (stock) for $XRP holders?", the X user asked.

This, Fagel responded to saying there is no legal mechanism for the SEC order a company to issue equity. "Retail $XRP never had any limitations on their legal rights to trade $XRP," Fagel added.

Crypto guidance is good

In new guidance, the SEC acknowledges that most crypto assets are not in themselves securities. This follows as the crypto industry has long sought greater clarity on whether particular assets are considered securities, which typically require more regulatory disclosures than commodities.

Fagel stated that the guidance is good but might not be the right answer legally: "Which isn't to say I have a position on the new guidance; it's good for the SEC to issue guidance (though it's more important for Congress to act; laws mean a lot more than reversible guidance without force of law). But the guidance isn't necessarily the 'right' answer legally."