The Legal Battle Is Not Over Yet: Ripple Continues Litigation with the SEC
Date: 2023-07-15 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
Ripple Labs won a partial victory in a protracted confrontation with the US Securities and Exchange Commission (SEC).
The decision of the federal court may be a turning point for the cryptocurrency industry, but the judicial saga is far from over.
Ripple didn't violate securities law — but only partially
U.S. District Judge Analysis Torres ruled that Ripple did not violate federal securities laws by selling XRP on crypto exchanges. The decision led to a sharp increase in the price of the asset: after its announcement, the token's quotes soared by tens of percent.
However, yesterday's verdict was not an unequivocal victory for Ripple. Judge Torres also stated that XRP sales to institutional investors can still be classified as securities transactions. This means that the company is waiting for another legal obstacle.
The crux of the dispute was whether the offering of Ripple's native token was an illegal sale of securities. In 2020, the SEC accused Ripple of illegally raising $1.3 billion through the sale of XRP and included CEO Brad Garlinghouse and co-founder Chris Larsen in the lawsuit.
Interestingly, Torres' decision was the first time a court favored a cryptocurrency company, finding some XRP sales to be non-compliant with U.S. securities laws. The ruling differentiated between transactions on crypto exchanges, in which Ripple did not know the identity of the buyer, and direct sales to institutional investors.
The outcome of the Ripple case is crucial for the development of the crypto industry
Despite the ambiguity of the decision, Ripple executives — in particular, CEO Brad Garlinghouse — regarded it as a step in the right direction.
Legal Director Stuart Alderoti also concluded that the judge's decision confirms the absence of the SEC's unlimited power over cryptocurrencies.
"Today we won a huge victory - from the point of view of the law, XRP is not a security. Also, according to the law, sales on exchanges are not securities. Sales by company executives are not securities. Other distributions of XRP — to developers, charities, and employees — are not securities," he wrote.
Torres left the question of whether Garlinghouse and Larsen were personally responsible for violating institutional selling rules to the discretion of the jury.
Representatives of the SEC, in turn, noted the solidarity of the court with the regulator on the issue of asset valuation using the Howey test, and said they would continue to study this decision.
While the progress made on the Ripple lawsuit represents a significant step in defining the murky relationship between the crypto industry and financial regulators, the battle is far from over.
