Jay Clayton authorized the SEC’s lawsuit against Ripple on December 22, 2020, and is now the director of national intelligence.
XRP fell 60% in the week after the filing and stayed off U.S. exchanges for two and a half years.
Ripple still cannot sell XRP to U.S. institutions without registering those sales as securities, because Judge Torres refused twice to lift the injunction.
The CLARITY Act could nullify the injunction by reclassifying XRP as a digital commodity, but Polymarket gives the bill only a 14% chance of passing this year.
Two retirees, same $1 million, same 4% rule, buy one finished with $1.4 million, the other hit $0 in 12 years. Our free reader guide explains the flaw that separated them, and the income-first method built to avoid it.
Jay Clayton was the chairman of the Securities and Exchange Commission when the agency sued Ripple. He authorized the lawsuit on December 22, 2020, and left the agency the next day. He is now the director of national intelligence, sworn in on August 3 to oversee 18 U.S. intelligence agencies.
The case he started ran for nearly five years and closed in August 2025, but the court’s ruling still stands, and it still restricts what Ripple can do with XRP (CRYPTO:XRP) in the United States.
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What Clayton’s Lawsuit Did to XRP in December 2020
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The SEC sued Ripple, CEO Brad Garlinghouse, and co-founder Chris Larsen on December 22, 2020, claiming the company had raised $1.3 billion through an unregistered securities offering going back to 2013. The XRP price fell roughly 60% over the following week, dropping to around $0.20.
However, the bigger damage came from the exchanges. U.S. platforms can only list securities if they register as securities exchanges, so any platform still offering XRP would have been trading unregistered securities if the court sided with the SEC. But none of them wanted to take that risk.
The 4% Rule is Broken, Built On A World That No Longer Exists
Every retiree knows about the 4% rule, but it frames retirement as a slow liquidation and still causes retirees with seven-figure accounts to agonize over a dinner out.
There’s a different way to run the math that makes more sense today. Build an income floor — dividends, interest, and Social Security that cover your essential bills every month — and you never have to sell shares into a down market just to pay them.
Bitstamp halted XRP trading for U.S. customers on January 8, 2021, Binance.US followed on January 13, and Coinbase suspended it entirely on January 19. Bittrex, Crypto.com, CrossTower, and Beaxy did the same, and Jump Trading and Galaxy Digital—two of the biggest trading desks in crypto—stopped making markets in the coin. Within a month, the third-largest cryptocurrency in the world was effectively locked out of the American market.
XRP stayed off those platforms for two and a half years. Coinbase only relisted it in July 2023, after Judge Analisa Torres ruled that XRP sold on public exchanges was not a security.
The Injunction on Ripple’s Institutional XRP Sales Never Lifted
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Judge Analisa Torres found that Ripple’s direct sales to institutional buyers, worth $728.9 million across more than 80 buyers, were unregistered securities offerings. Her final judgment in August 2024 permanently barred the company from repeating them and imposed a $125 million civil penalty, which was well below the roughly $2 billion the SEC had asked for.
The SEC then changed its position. Under new leadership that had dropped most of its crypto enforcement, the agency joined Ripple in asking Torres to cut the penalty to $50 million and dissolve the injunction. She rejected that request on May 15, 2025, for failing to show exceptional circumstances, then rejected a second attempt on June 26, writing that the parties had no authority to agree not to be bound by a court’s final judgment.
So, Ripple and the SEC dropped their appeals at the Second Circuit on August 22, 2025, which left the judgment fully intact, including the injunction and a penalty larger than the one the company had negotiated.
The injunction does not stop Ripple selling XRP to institutions outright. It stops the company doing it without registering those sales with the SEC, and registering them would mean treating XRP as a security in exactly the transactions Ripple spent five years arguing were not securities sales. XRP sales made up most of Ripple’s revenue as recently as 2023, and the company’s U.S. institutional business now runs through the RLUSD stablecoin and the Ripple Prime brokerage instead.
XRP Spent the ETF Boom Stuck in Court
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Spot Bitcoin ETFs started trading in January 2024 and spot Ethereum funds followed that July, while Ripple was still in court. No issuer could get an XRP fund approved while the SEC was arguing in open litigation that XRP was a security, so XRP ETFs could not launch until November 2025, months after the case closed.
Investors have put $51.3 billion into Bitcoin’s spot ETFs since launch, and those funds hold $76.3 billion today. Meanwhile, XRP’s funds have recorded $1.51 billion in cumulative flows and hold under $1 billion.
Bitcoin traded near $46,000 when its ETFs launched and reached $126,000 by October 2025, so those funds spent nearly two years taking money in while the price climbed. XRP’s funds launched five weeks after that peak, straight into the downturn that has run ever since.
So, pension funds, advisers and asset managers spent those two years getting comfortable buying crypto through ETFs, but XRP was the one major asset they could not buy that way.
What Would Finally Close the Ripple Case for XRP?
Nothing will remove the injunction now, so the only way it stops costing XRP anything is if the law changes around it.
The injunction bars Ripple from future violations of Section 5, which is the rule requiring securities to be registered before they are sold. The CLARITY Act would make XRP a digital commodity under federal law, so Ripple’s sales to institutions would no longer count as securities transactions, and the injunction would have nothing left to stop.
But the bill has not moved. It has been on the Senate calendar since June 1 without reaching the floor, senators leave for recess on August 10, and Polymarket traders give it a 14% chance of becoming law this year.
Before Your Next Withdrawal, Run One Number ( It’s Not The 4% Rule Everyone Knows)
Take your essential monthly expenses and subtract your guaranteed income — Social Security, plus any pension. What’s left is your income gap, and how you close it determines whether retirement runs on share sales or on a paycheck your portfolio writes you every month. Our free reader guide, The 4% Rule Is Broken, shows exactly how to close that gap with portfolio income: a worked example (one retiree needed about $480,000 in income-producing assets to cover his essentials for good), an eight-point conversion checklist, and the 20-year numbers comparing dividends to withdrawals. It’s free and takes about 15 minutes to read. Get the guide here before you take your next withdrawal.
