Today saw a development in the story of Ripple Labs, the XRP token, and the question of whether the sale of its cryptocurrency token in the US violated the country’s securities laws.
Judge Analisa Torres expressed a nuanced viewpoint on the subject in a decision from the U.S. District Court of the Southern District of New York.
In conclusion, the district judge allowed the SEC’s petition for summary judgment with relation to the institutional sale by Ripple of the XRP token after carefully evaluating numerous distinct sales methods of the XRP token throughout time and applying the Howey Test to each.
According to Torres, this indicates that XRP is a security when it is utilized for institutional sales.
In an intriguing turn of events, the judge later rejected the SEC’s request for summary judgment with regard to XRP programmatic sales, among other situations, including transactions by two of the company’s former and current leaders.
In other words, she decided that when XRP is offered to the general public, it is not a security.
In essence, the decision is a two-edged sword, but the majority of the cryptocurrency community is seeing it favorably, perhaps because they are primarily retail investors who are interested in the non-security aspect of the decision.
For background, let’s note that the SEC filed a lawsuit against Ripple in December 2020, accusing the company and its two executives Chris Larsen and Brad Garlinghouse of generating $1.3 billion through an allegedly “unregistered, ongoing digital asset securities offering.”
The SDNY’s decision comes at a time when the SEC is stepping up enforcement proceedings against organizations that it believes violated US securities law, filing lawsuits against foreign players in the cryptocurrency sector like Binance and domestic companies like Coinbase.
This recent decision demonstrates that there are organizations outside of the SEC that consider some activities in the cryptocurrency industry to be unlawful, even if they do so less broadly than the SEC itself.
After the mixed decision, the price of XRP increased 28% to 60 cents at the time of publication. The token last had such a high value in May 2022.
Why is XRP’s value increasing when it hasn’t received a full legal pardon? Some investors may have overestimated the legal risk of today’s decision for XRP and Ripple Labs, or perhaps an even partial victory for XRP was better than expected. In either case, the judge’s ruling is generating rewards for XRP investors.
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