In a landmark ruling, Ripple Labs breathed a sigh of relief when the United States District Court in the Southern District of New York favored the company against a lawsuit filed by the Securities and Exchange Commission (SEC).
Judge Analisa Torres, on July 13, declared the XRP token, Ripple’s digital currency, not a security, marking a significant turning point in a case that dates back to 2020.
A decisive victory for Ripple Labs
This verdict puts an end to the SEC’s pursuit of Ripple, which had aimed to require additional regulation of XRP, alleging it to be a security. The central argument hinged on the status of XRP—was it a security, or was it not?
Ripple, along with CEO Brad Garlinghouse and co-founder Chris Larsen, were sued by the SEC for executing an unregistered securities offering by selling XRP to investors.
This prolonged tussle, which spanned a grueling 31 months, has finally come to an end with Judge Torres granting summary judgement in favor of Ripple Labs.
Contrary to the SEC’s argument, Judge Torres stated that XRP, in its capacity as a digital token, doesn’t represent a ‘contract, transaction, or scheme’ meeting the Howey requirements of an investment contract.
The jury too, echoed the sentiments of Judge Torres, concluding that XRP does not qualify as a security.
Effect on XRP price
The ripple effect of this victory was instantly visible in the financial markets. XRP’s price saw a meteoric rise of 16% within moments of the news breaking, highlighting the impact of the judicial ruling on investor sentiments.
The cryptocurrency had notched up a value of $0.60 at the time of writing, marking a sharp 29% increase since the favorable ruling was passed less than an hour earlier. A careful look at the court documents revealed the specifics of the judgement.
According to these papers, the defendants’ plea for summary judgment has been approved with respect to the Programmatic Sales, Other Distributions, and the sales made by Larsen and Garlinghouse. However, the judgement was not in favor when it came to the Institutional Sales.
This ruling has brought much-needed clarity to Ripple’s status and the larger cryptocurrency landscape. It has not only vindicated Ripple’s long-held position but has also set a precedent for similar cases in the future.
With this victory, Ripple can now focus on building its ecosystem and pioneering advancements in the digital payment space.
Bottomline is Ripple’s victory over the SEC lawsuit represents a seminal moment in the world of digital currencies. It highlights the need for a clearer understanding and regulation of digital assets, which are fast becoming a mainstay in our modern financial ecosystem.
As Ripple moves forward from this victory, the digital currency landscape eagerly awaits to see what the future holds.