Ripple Labs, the blockchain technology company behind the XRP token, has emerged victorious in the lawsuit brought forth by the Securities and Exchange Commission (SEC). On July 13, Judge Analisa Torres of the United States District Court in the Southern District of New York ruled partially in favor of Ripple Labs, declaring that XRP is not a security in the context of programmatic sales on digital asset exchanges. This decision triggered a wave of jubilation within the crypto community and raised XRP’s price.
In December of 2020 the SEC brought an action accusing Ripple of offering unregistered security in the form of a XRP token. Market players have been eagerly awaiting the outcome of this suit, given that it has an important impact on classification and regulation of cryptocurrencies.
Judge Torres’ ruling provides a mixed outcome for both Ripple and the SEC. While it has been concluded that XRP is not a security for programmatic sales, and therefore cannot be sold to institutional investors as per the criteria set out in Howey’s test, she concludes that they meet those criteria. The Howey Test is a legal standard used to determine whether a transaction involves an investment contract and falls under the definition of a security.
Ripple’s CEO, Brad Garlinghouse, expressed optimism regarding the case’s resolution prior to the court ruling. He underlined that, whatever the outcome, his company remained committed to innovation in the field of crypto. Garlinghouse seems to have been completely persuaded, given that Ripple’s partial win marks a significant milestone in their suit against the Securities and Exchange Commission.
The impact of the Decision was swiftly and clearly felt in the market. Following this news, the XRP price increased sharply from $0.45 to $0.61 and reached a record high of more than 25%. The surge is driven by the positive reaction of the market to the court ruling, as well as a new clarity in relation to XRP’s legal status.
The point is that, although this ruling had a positive result for Ripple in the sale of programmatics, the litigation against it by the SEC continues to exist and there have been no dismissals from the Commission’s allegations concerning further aspects of its operations and sales. The Court denied Ripple’s application for a summary judgment in respect of institutional sales, indicating that further legal proceedings are required to determine their regulatory status.
The protracted legal battle between Ripple and the SEC has garnered significant attention over the past three years. There has been high drama throughout the proceedings, such as the release of Honman’s files and continued defiance by Brad Garlinghouse in response to SEC allegations. The court ruling represents a significant milestone in this complex legal saga, offering clarity on the status of XRP as a security for programmatic sales.
This ruling has implications for Ripple and XRP as well. It provides significant guidance to other blockchain companies active in the US, which makes it easier for them to make better choices about what kinds of regulation they deal with. The decision reinforces the notion that not all cryptocurrencies can be classified as securities, and each case must be evaluated on its own merits.
As the crypto community celebrates this victory for Ripple, it is important to recognize that the SEC’s efforts to regulate the crypto space are far from over. In order to achieve a balance between investor protection and foster technological innovation, the evolution of this industry requires continuing dialogue and collaboration between regulators and entrepreneurs.
Although the decision is a considerable step forward in Ripple’s case, it does not end the legal battle. The fate of Ripple’s institutional sales will be determined by further proceedings. However, the Court’s judgment has given Ripple a renewed sense of optimism and energy in its fight against the Securities and Exchange Commission, marking an important victory for the firm as well as new developments in the ongoing dialogue on regulation of cryptocurrencies.
Greene, T. (2023, July 13). Breaking: Judge rules XRP is not a security in SEC’s case against ripple. Cointelegraph. https://cointelegraph.com/news/ripple-wins-case-against-sec-as-judge-rules-xrp-is-not-a-security