Ripple scored a victory today as the courts have now ruled that the sale of XRP on crypto exchanges did not violate US securities law in a partial win for the digital asset firm. The ruling helped to drive the value of XRP higher – recently up by 70% today.
$XRP is NOT a security.
What was plain to see for anyone who was even remotely paying attention has now been confirmed in a court of law. https://t.co/046QZtvKXG
— CrediBULL Crypto (@CredibleCrypto) July 13, 2023
Ripple CEO Brad Garlinghouse celebrated on Twitter by sharing the court’s language on the decision following an extended legal battle:
“XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract.”
This is a big deal, said Sheila Warren, CEO of the Crypto Council for Innovation, commenting on the news.
“It’s been clear since this case was filed that it would have implications across the entire industry. This fundamentally undercuts the SEC’s argument that it has the authority over these underlying assets and that regulatory clarity already exists.”
Warren described the ruling as a call to action for Congress to move forward with current proposals.
“This is a significant thaw in the regulatory permafrost that the US has been stuck in.”
Chris Perkins, President of CoinFund, and member of the CFTC’s Subcommittee on Digital Assets, welcomed the decision:
“In the absence of focused, nuanced legislation designed to proactively catalyze responsible innovation for the cryptocurrency industry, the courts will inevitably deliver the clarity that is needed by entrepreneurs to build without fear of repercussion. Today’s court ruling on XRP is a welcome step forward in delivering this clarity, and we will be watching closely as other cases make their way through the judicial process.”
Crypto Twitter was quick to predict that XRP was poised to rise even higher as the digital asset may be listed or rel-listed on more crypto exchanges following the court’s decision.
It was not a complete win for Ripple as the judge overseeing the case said that Ripple did violate existing law by selling XRP directly to investors.
CoinShares Head of Product, Townsend Lansing, said the SEC now has a precedent in place for more legal action.
“It is important to note that institutional investors who purchased directly from Ripple may find themselves subject to class-action litigation as potential underwriters. This is an area to watch closely, especially if big-name venture capitalists were involved,” said Lansing.
He added that the decision does not absolve the exchanges from potential liability for offering an unregistered security.
“Ripple’s claims of due process violation were dismissed by the court, which held that the defendants had “fair notice” of their infringement. This could have significant implications for similar claims by Coinbase, should they allege lack of notice,” explained Lansing.
Hashflow General Council, Rahsan Boykin said the ruling highlights the problem with the SEC’s regulation by enforcement strategy that lacks clarity.
“This strategy breeds uncertainty, as regulators lack clear guidelines to adhere to, hindering market innovation. To foster a conducive environment for growth, Congress must step in and offer guidance akin to Europe’s MICA regulations. Such clarity regarding the rules of the game will benefit all stakeholders, providing a framework for responsible and forward-thinking innovation. It is imperative to move away from a reactionary enforcement model and embrace proactive regulation that fosters industry development while safeguarding the interests of investors and consumers.”