In a significant legal development, Judge Analisa Torres of the United States District Court in the Southern District of New York delivered a partial victory to Ripple Labs in a case initiated by the Securities and Exchange Commission (SEC) in 2020.
The ruling, issued on July 13, states that XRP, the cryptocurrency associated with Ripple, is not considered a security when sold through programmatic sales on digital asset exchanges. However, the court also upheld the SEC’s claim that XRP qualifies as a security in sales made to institutional investors, as it meets the conditions established in the Howey Test.
SEC Lawsuit and Ruling Details
The Securities and Exchange Commission’s lawsuit aimed to compel Ripple Labs to cease the offering of its XRP token by asserting that it should be classified as a security and subjected to additional regulations.
However, Judge Torres’ ruling granted summary judgment in favor of Ripple Labs regarding programmatic sales, other distributions, and the sales made by Brad Garlinghouse and Chris Larsen, the CEO and co-founder of Ripple, respectively.
Furthermore, the court also ruled that XRP qualifies as a security when sold to institutional investors, aligning with the conditions outlined in the Howey Test. The court denied summary judgment regarding institutional sales.
Market Reaction and Price Movement
As soon as the news broke, XRP witnessed a rapid surge in price, soaring from $0.45 to $0.61 within minutes. This remarkable increase represents a rise of over 25% at the time of writing this article, highlighting the immediate impact of the court’s decision on XRP’s market value.
The Ongoing Legal Battle and Ripple’s Defiance
The case against Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen has been ongoing since December 2020, when the SEC initially filed a lawsuit alleging the unauthorized offering of securities.
Throughout the three-year duration of the case, various dramatic events, such as the release of the “Hinman Documents” and Garlinghouse’s continued defiance against the SEC’s accusations, have added intrigue to the proceedings.
Despite the ongoing legal battle, Ripple Labs’ CEO, Brad Garlinghouse had expressed his belief that the case would soon come to an end. He emphasized that while this victory was significant, the fight for the cryptocurrency industry was far from over.
Crypto Community’s Reaction
The news of the court ruling has sparked jubilation within the crypto community. Alongside the significant surge in XRP’s value, market participants have expressed a sense of optimism and celebration following Judge Torres’ decision. This development is seen as a significant win for Ripple and has brought renewed optimism among cryptocurrency enthusiasts.