2023-07-13 15:42:51
Court acknowledgedthat the sale of Ripple Labs native token (XRP) is not an offer of investment contracts. This means that XRP is not considered a security.
Judge for the Southern District of New York, Analisa Torres, ruled in favor of the company in a case filed by the U.S. Securities and Exchange Commission (SEC) back in 2020.
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“XRP tokens that were sold to retail investors cannot be securities,” the court said in the ruling.
However, the court also ruled that institutional sales of XRP might all qualify as sales of unregistered securities.
After the court decision, the price of the token rose by 26.13%, to $0.594 at the time of writing.
XRP price. Source: CoinMarketCap
SEC and Ripple Litigation
In December 2020, the Commission filed a lawsuit once morest Ripple. The regulator claimed that the blockchain company violated federal securities law by selling $1.3 billion worth of unregistered securities in the form of XRP tokens since 2013.
As arguments for recognizing XRP as a security, the SEC indicated a classification in accordance with the Howey test. However, Ripple’s lawyers argued otherwise and accused the regulator of abuse of power.
Key documents in the Ripple case
One of the important points in the proceedings of the SEC and Ripple is the court’s ban on hiding the documents of former regulator employee William Hinman. In May, the court rejected the Commission’s request not to add these materials to the case file. For the crypto startup, this was a kind of “victory”.
In a June 2018 speech, Hinman stated that the native Ethereum blockchain token, ether (ETH), is not a security. Torres ruled that the recording of this speech was subject to a strong presumption of public access. Moreover, the documents played a key role in the proceedings.
What does Ripple win mean?
Experts believe that the company’s victory can directly affect the state and further development of the cryptocurrency market as a whole. This might change the entire SEC approach to regulating cryptocurrencies, as well as boost other cryptocurrencies, especially those that are similar in structure to XRP.
What’s more, Ripple’s victory will boost business by allowing the company to operate without the regulatory uncertainty that has plagued it for years. Under these conditions, demand for its products, such as solutions for cross-border payments, may increase.
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