The U.S. Securities and Exchange Commission (SEC) has dropped its appeal against Ripple, marking a major victory for the company and its supporters. Crypto lawyer John Deaton claims this move solidifies XRP’s classification as a digital commodity rather than a security, closing a years-long legal battle.

However, Ripple still faces a $125 million judgment for improper XRP sales. Deaton suggests the company may now negotiate a lower penalty, given the SEC’s sudden reversal.

Deaton, a key advocate for XRP holders, previously criticized the SEC’s handling of the case, arguing it was an attack on the crypto industry. His legal fight led him to challenge Senator Elizabeth Warren—a vocal crypto critic—for a seat in Washington, D.C.

A crucial question now is whether Ripple will continue with its cross-appeal, filed in October 2024. Deaton believes the SEC fears this move, as a new ruling could further limit its jurisdiction over digital assets. With this leverage, Ripple may push for a more favorable settlement.

Despite the victory, Ripple still faces restrictions from Judge Analisa Torres’ injunction, which prevents the company from selling XRP directly to institutional investors in the U.S. If Ripple wants to expand its partnerships with banks, overcoming this legal hurdle is critical.

Reflecting on the lawsuit’s broader impact, Deaton recalls how it initially seemed like an industry-wide crackdown orchestrated by regulators hostile to crypto. Yet, Ripple’s resilience in staying U.S.-based despite the legal battle could now work in its favor.

With the SEC retreating and regulatory sentiment shifting, Ripple’s fight may shape the future of crypto regulations in the U.S.