Ripple CEO Brad Garlinghouse has declared that a recent federal court ruling has affirmed that XRP is “not a security.” This decision has provided Ripple, a digital payments company, with increased flexibility to pursue various business opportunities around the world.
During an interview on Bloomberg TV, Garlinghouse expressed his relief that Ripple can now promote the various use cases for Ripple and its technology without the fear of regulatory action. This ruling marks a significant win for the crypto industry, as it undermines the stance of the US Securities and Exchange Commission (SEC), which previously sued Ripple in late 2020.
The SEC accused Ripple, co-founder Chris Larsen, and Garlinghouse of misleading investors by selling over $1 billion worth of tokens without registering them. However, the US District Judge Analisa Torres in New York ruled that the company’s $729 million sales of XRP tokens to sophisticated investors qualified as an investment contract under federal securities law. This ruling did not apply to the tokens sold to the broader public through exchanges.
In response to the ruling, Garlinghouse referred to the SEC as “a bully” and celebrated the outcome as the first time the agency has lost a crypto case. Although the SEC is expected to appeal the decision, any appeals could prolong the legal battle for years. Despite this, Garlinghouse hailed the ruling as a win for Ripple and the entire crypto industry.
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A crucial aspect of the ruling is the distinction made between sophisticated investors and retail buyers. The court recognized that retail buyers often lack knowledge about where their money is going and how it is being used, in contrast to institutional investors. It remains uncertain whether this reasoning will impact other legal battles or withstand potential appeals.
One potential implication of this ruling is that it could give other cryptocurrencies, classified as securities by the SEC, the opportunity to challenge that classification in court. If these cryptocurrencies can demonstrate that they do not meet the legal definition of investment contracts, it could open up new avenues for innovation and growth.
On the flip side, the ruling may result in increased scrutiny of other cryptocurrencies by both the SEC and other regulatory bodies. The SEC has already indicated that it will continue reviewing the decision and take appropriate steps to protect investors.
However, the ruling could also lead to the expanded adoption of cryptocurrencies by institutional investors, who have been hesitant to invest in assets considered securities. With more clarity on the regulatory status of cryptocurrencies, institutional investors may be more willing to invest in these digital assets, resulting in increased liquidity and market capitalization.
In response to the ruling, the SEC spokesperson Scott Schneider stated that the agency was pleased with the court’s determination that XRP tokens were offered and sold by Ripple as investment contracts in violation of securities laws. The SEC will be continuing its review of the decision.
Overall, this ruling bears significant implications for the digital asset industry, as it provides greater clarity on the regulatory status of cryptocurrencies. This clarity paves the way for further innovation and adoption, enabling companies like Ripple to explore new business opportunities and propel the industry forward.
(Image: XRP’s downtrend on the 1-day chart by over 11%. Source: XRPUSDT on TradingView.com)
