XRP Soars After Judge Makes A Landmark Ruling In Favour Of Ripple
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Ripple Labs and its executives recorded a major win on Thursday against the US Securities and Exchange Commission. A US Judge delivered a historic ruling in favor of Ripple and the entire crypto industry. The judgment triggered a significant gain for XRP.
Ripple secures a major win against the SEC
Ripple Labs’ native token, XRP, soared by over 70% shortly after the landmark ruling by US District Judge Analisa Torres. However, the token has since shown signs of reversal, having dropped by 13% at the time of writing.
The ruling by Judge Torres has been seen as a major win for the cryptocurrency industry, which has been struggling with operating in an uncertain regulatory climate. While the ruling was largely in favor of Ripple and XRP, the SEC also enjoyed a partial victory.
According to the judge, the XRP sales by Ripple on public crypto exchanges did not constitute securities under the law because the buyers did not expect to generate profits based on the efforts made by Ripple Labs to grow its payments network.
Judge Torres opined that the sales made on cryptocurrency exchanges were “blind bid/ask transactions” where the buyers did not have any knowledge as to whether the invested funds went to Ripple Labs or other sellers of the XRP token.
The judge used precedence in a case before the US Supreme Court that found that the investment of money within a common enterprise where the profits were determined solely by the efforts of others constituted a security known as an investment contract.
The SEC charges also included the co-founder of Ripple, Brad Garlinghouse, and the former CTO, Chris Larsen. Judge Torres noted that the XRP sales made by the two Ripple executives on cryptocurrency exchanges and other distributions could not be ranked as securities.
The chief legal officer at Coinbase, Paul Grewal, said, “For exchanges, for tokens that are listed on exchanges, for regular investors, there’s no question that this ruling strikes a blow to the idea that somehow securities are being traded when people go onto exchanges and trade the assets.”
SEC also secures a partial win
While the judgment was a major win for Ripple, the SEC also secured partial victory. Judge Torres said that Ripple had allocated $728.9 million worth of XRP sales to hedge funds and other parties, which constituted the unregistered sales of securities.
The judge added that the marketing language used by Ripple for institutional investors indicated that the company was pitching a speculative value proposition for XRP based on the efforts of the company to create a blockchain infrastructure that supports this digital asset.
The judge also said that the remaining issues needed to be determined by a jury. This jury could help determine whether Garlinghouse and Larsen were complicit in violating the securities laws. The judge added if the matter goes to trial, the executive cannot argue that they did not have fair notice of XRP being a cryptocurrency.
