Yesterday, Ripple Labs secured a partial victory in the legal battle against the U.S. Securities and Exchange Commission (SEC). The case, which dates back to 2020, saw Judge Analisa Torres of the United States District Court in the Southern District of New York ruling partially in favor of Ripple Labs on July 13. The court ruling states that the token is not a security in relation to programmatic sales on digital asset exchanges. However, the judge also determined that XRP qualifies as a security when sold to institutional investors, based on the conditions set in the Howey Test.
Furthermore, he stated that a token sold through a cryptocurrency exchange cannot be considered a security because buyers do not directly invest in Ripple but rather purchase through an intermediary exchange. This does not violate the third prong of the Howey Test.
However, selling XRP directly to institutions is still deemed a securities offering and a violation of securities laws. Following this case, there is a possibility of introducing a new cryptocurrency sales model to avoid legal violations.
The pre-trial phase has concluded, and the SEC can appeal or take the case to a higher court for a final ruling.
Details of the Ruling
The court documents reveal that Judge Torres granted summary judgment in favor of Ripple Labs regarding the programmatic sales and other distributions of Ripple’s token. The judgment also includes the sales made by Ripple’s CEO Brad Garlinghouse and co-founder Chris Larsen. However, the ruling denied the motion for summary judgment in relation to institutional sales.
Background and Impact
The SEC lawsuit aimed to halt Ripple from offering its token, alleging that it was an unregistered security that required additional regulation. The case has been ongoing since December 2020 and has seen various twists and turns, including the release of the “Hinman Documents” and Ripple CEO Brad Garlinghouse’s persistent defiance against the SEC’s accusations.
Market Response and XRP Price Surge
The announcement of the court ruling had an immediate impact on the price of XRP. Within hours, the token’s value surged from $0.47 to $0.82, representing a significant increase of over 75% at the time of writing. This surge in price reflects the positive sentiment and jubilation expressed by the crypto community in response to the ruling.
CoinBase & Kraken to Relist XRP
Coinbase has officially announced its decision to relist Ripple’s cryptocurrency. In a tweet, Coinbase stated that it will re-enable trading for XRP on its own network. The relisting is expected to start later, subject to liquidity conditions being met. Trading pairs for XRP, including USD, USDT, and XRP-EUR, will be launched in phases once there is sufficient supply. However, support for XRP may be restricted in certain jurisdictions.
Kraken, another major cryptocurrency exchange, has also announced its decision to relist Ripple’s XRP. Following the recent favorable ruling that XRP is not a security, Kraken plans to reintroduce trading for XRP on its platform. The relisting of XRP on Kraken signifies a positive development for the cryptocurrency, allowing users to trade XRP once again. It is expected that Kraken will follow a similar approach as other exchanges, ensuring compliance with regulatory requirements and implementing appropriate trading pairs for XRP.
While the ruling brings some relief to Ripple and its supporters, the legal battle is not entirely over. The case will continue to unfold as the SEC’s claims related to institutional sales remain. Ripple CEO Brad Garlinghouse has acknowledged that the fight for the crypto industry continues, emphasizing the need for regulatory clarity.
The outcome of this case holds implications for the broader cryptocurrency industry, as it sheds light on the classification of digital assets and the regulatory framework surrounding them. As the legal proceedings progress, the crypto community will closely follow the developments and their potential impact on the future of cryptocurrencies like XRP.