The SEC lost the Ripple case. The court did not recognize XRP as a security
Date: 2023-07-14 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
The court recognized that 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 Analisa Torres of the Southern District of New York ruled in favor of the company in a case brought by the US Securities and Exchange Commission (SEC) back in 2020.
However, the court also ruled that institutional sales of XRP could all qualify as a sale of unregistered securities.
After the court decision, the price of the token increased by 26.13%, to $0.594 at the time of writing.
SEC and Ripple litigation
In December 2020, the Commission filed a lawsuit against Ripple. The regulator argued that the blockchain company violated the federal securities law because it had been selling unregistered securities in the form of XRP tokens worth $1.3 billion since 2013.
As arguments for recognizing XRP as a security, the SEC indicated the classification in accordance with the Howey test. However, Ripple's lawyers argued the opposite and accused the regulator of abuse of authority.
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 a former employee of the regulator, William Hinman. In May, the court rejected the Commission's request not to attach these materials to the case. For a crypto startup, it is It became a kind of "victory".
In a June 2018 speech, Hinman stated that the native token of the Ethereum blockchain, ether (ETH), is not a security. Torres ruled that the recording of the speech was subject to a strict presumption of public access. Moreover, the documents played a key role in the proceedings.
What does Ripple's victory mean?
Experts believe that the company's victory can directly affect the state and further development of the cryptocurrency market as a whole. This could change the SEC's entire approach to regulating cryptocurrencies, as well as boost the growth of other cryptocurrencies, especially those that are structurally similar to XRP.
Moreover, Ripple's victory will spur business development by allowing the company to operate without the regulatory uncertainty that has plagued it over the years. Under these conditions, the demand for its products, such as solutions for cross-border payments, may grow.
