Ripple’s Partial Victory Propels XRP to 4th Position
On July 13 the Southern District of New York issued its decision concerning Ripple and the Securities and Exchange Commission (SEC) case. Judge Analisa Torres ruled that Ripple’s native coin XRP was not a security. Judge Torres’ ruling has triggered the XRP prices to garner bullish steam and increase in double digits, according to CoinMarketCap.
On June 6, the SEC accused Binance and the chief executive officer, Changpeng Zhao, of offering unregistered crypto assets. Afterward, the SEC accused Coinbase of exposing the customers to risk by operating as an unregistered broker.
Ripple Wins Over SEC
In its June 6 lawsuit, the SEC announced that the nineteen best-performing crypto assets were securities. The SEC claimed that XRP, Solana (SOL), Cardano (ADA), and Axie Infinity (AXS), among other crypto assets, were securities.
In its submission the SEC highlighted that most crypto assets were securities that could not be regulated under the existing regulations. This implies that the market operators could still challenge the authority on crypto asset regulation in the US.
Last month the SEC accused Coinbase of offering the unregistered crypto asset which contravened Section 5 of the Securities Act. The SEC charges against Coinbase mirrors the regulatory action the market regulators took against Ripple in 2020.
According to the SEC filing, Ripple was accused of violating the securities laws by offering unregistered securities worth $1.3 billion from 2013.
A review of the July 13 court report illustrated that Ripple offered programmatic sales to retail clients. The court observed that XRP crypto payments used to settle employees’ salaries and other services failed to meet the existing criteria of an “investment contract.”
A scrutiny of Ripple’s operation revealed that the crypto firm received 80 billion XRP from the founders, which was supposed to be used to improve its blockchain ecosystem. Since then, Ripple has successfully expanded its brand value and cemented its market dominance.
Will the Court Ruling Favor Ripple?
Judge Torres observed that the crypto firm issued XRP assets worth $728.9 million to institutional clients. The judge ruled that the Ripple offering to institutional investors was unlawful.
The court judgment report showed that most of the institution’s clients invested in XRP, expecting to generate substantial gains. Subsequently, the institutional investors expected Ripple to plow back profit to strengthen the XRP ecosystem, which will send the crypto price to rally.
The court indicated that the XRP offering on exchanges and algorithms did not include investment contracts. And the XRP token issued to the institutional clients by Ripple violated the securities law.
Even though Judge Torres’s ruling fell short of Ripple’s win, the case will undergo further trial. In the meantime, the court plans to issue a separate order, including the trial dates and pre-trial timelines.
XRP Price Reacts to Court Ruling
Following Judge Torres’s ruling, the XRP price surged by 67.38% to trade at $ 0.7878, ranking as the fourth largest crypto asset. According to CoinMarketCap, XRP daily trading volume reached $12,878,440,342, a 1680.34% increase. The XRP market capitalization jumped by 67.49% to reach $41.46 billion in the last 24 hours.
In a Twitter statement, the managing partner at Cinnneamhain Ventures, Adams Cochran, predicted that the final court ruling would favor Ripple. The director noted that XRP’s programmatic sale failed to meet the third criterion of the Howey Test.
Cochran also expressed his delight for XRP’s victory. He mentioned that if the court agrees that XRP was not a security, the court ruling would validate his previous announcement that Bitcoin (BTC) and Ethereum(ETH) were not securities.
In a subsequent tweet issued by the chief executive of Ripple, Brad Garlinghouse appreciated the community for supporting the crypto firm. The CEO recounted his previous statement, that Ripple was on the right side of the law.
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