(Adds comment from Garlinghouse and Larsen and attempt to seek comment from SEC, background on case in paragraphs 7-15)

Oct 19 (Reuters) - The U.S. Securities and Exchange Commission dropped claims against two Ripple Labs executives in its lawsuit alleging the blockchain company violated U.S. securities law, according to a court filing in New York on Thursday.

The agency said in court papers it is dropping claims that Ripple Chief Executive Brad Garlinghouse and co-founder Chris Larsen aided and abetted sales of the cryptocurrency XRP which a judge has found amounted to unregistered sales of securities.

In its December 2020 lawsuit, the SEC accused Ripple of illegally raising more than $1.3 billion in an unregistered securities offering by selling XRP.

U.S. District Judge Analisa Torres in Manhattan granted Ripple a partial win in the case in July, finding that sales of XRP on public exchanges were not unregistered securities offerings. Torres subsequently rejected a request by the SEC to appeal that ruling.

She also ruled partly in the SEC's favor, saying the agency had shown the company's $728.9 million of XRP sales to hedge funds and other sophisticated buyers had violated the law.

The SEC's claims against Garlinghouse and Larsen over their role in those sales were to be tried before a jury.

Garlinghouse and Larsen, who have harshly criticized the SEC throughout the case, issued lengthy statements accusing the agency of a political agenda to, in Larsen's words, "suffocate crypto in America."

"Instead of looking for the criminals stealing customer funds on offshore exchanges that were courting political favor, the SEC went after the good guys," Garlinghouse said, an apparent reference to Sam Bankman-Fried, founder of crypto exchange FTX.

Bankman-Fried is

on trial

for what prosecutors have called a $10 billion fraud. Jurors at the trial have heard testimony that some of the funds were used to make political donations.

A spokesperson for the SEC did not immediately reply to a request for comment.

The agency said in its papers that the next step in the case is for both sides to present to the judge on what the appropriate penalty is for Ripple.

Torres' July ruling against the SEC was a rare setback in the regulator's long-runnning crackdown on the industry.

Under SEC Chair Gary Gensler, the agency has filed lawsuits against Binance, the world's largest cryptocurrency platform, and Coinbase, the largest U.S. cryptocurrency platform.

Gensler has said that many digital assets are securities and subject to the agency's regulatory authority.

Industry participants have argued U.S. securities laws are unworkable when it comes to crypto and lobbied for new regulations. (Reporting by Jody Godoy in New York; Editing by David Gregorio)