XRP Triumphs Over SEC: How Ripple Crushed the Crypto Case of the Decade 🎉

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14 Jul 2023

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Originally Published: Medium

Ripple Labs, the company behind the XRP cryptocurrency, has scored a major victory in its long-running legal battle with the U.S. Securities and Exchange Commission (SEC). On July 13, 2023, Judge Analisa Torres of the Southern District of New York ruled that XRP is not a security and granted summary judgment in favor of Ripple.

This ruling marks the end of a three-year lawsuit that began in December 2020, when the SEC accused Ripple of selling unregistered securities worth $1.3 billion by offering XRP to the public. The SEC claimed that XRP was an investment contract that gave investors an expectation of profits from Ripple’s efforts.

Ripple disputed this claim, arguing that XRP was a digital asset used for payments, not a security. Ripple also said that the SEC’s lawsuit was based on a flawed and outdated legal framework that did not apply to cryptocurrencies.

The case attracted a lot of attention and speculation in the crypto community, as it could have significant implications for the future of XRP and other cryptocurrencies. Many crypto enthusiasts supported Ripple’s position and hoped that the case would set a precedent for clarifying the regulatory status of crypto assets in the U.S.

The Judge’s Ruling 📜

After months of hearings, motions, and discovery, Judge Torres issued her ruling on July 13, 2023. She granted summary judgment in favor of Ripple on all counts, except for some institutional sales that were not relevant to the main issue.

In her opinion, Judge Torres stated that XRP did not meet the criteria to be considered a security under the Howey test, which is a four-part test used by courts to determine whether an asset is an investment contract.

The Howey test requires that:

There is an investment of money
In a common enterprise
With an expectation of profits
Derived from the efforts of others

Judge Torres found that XRP transactions did not involve an investment of money, as XRP holders did not contribute any capital to Ripple or share in its profits or losses. She also found that there was no common enterprise between Ripple and XRP holders, as they did not have any contractual or fiduciary relationship or mutual dependence.

Moreover, Judge Torres found that XRP holders did not have an expectation of profits derived from Ripple’s efforts, as XRP’s value was determined by market forces and not by Ripple’s activities. She noted that XRP had multiple use cases beyond Ripple’s network, such as remittances, gaming, e-commerce, and micropayments.

Judge Torres concluded that XRP was a decentralized digital currency that served a legitimate function and provided utility to its users. She said that applying securities laws to XRP would stifle innovation and harm the public interest.

The Impact of the Ruling 🚀

The ruling was welcomed by Ripple and its supporters, who celebrated the victory on social media and expressed their relief and gratitude. Ripple’s CEO Brad Garlinghouse tweeted:

We said in Dec 2020 that we were on the right side of the law, and will be on the right side of history. Thankful to everyone who helped us get to today’s decision — one that is for all crypto innovation in the US. More to come.
(and let’s start planning that proper party!)

XRP’s price also surged after the news broke, reaching as high as 64 cents at one point, its highest level since May 2023. According to CoinMarketCap, XRP is currently the fifth-largest cryptocurrency by market capitalization, with over $31.5 billion.

The ruling also had a positive impact on other cryptocurrencies, especially those that have faced similar regulatory uncertainty or scrutiny from the SEC. For example, Polygon’s matic token gained 11%, while the token tied to Solana jumped 14%, and Cardano’s token advanced 10%. Bitcoin and ether got a boost too, of 1.5% and 3%, respectively.

The ruling also has broader implications for the crypto industry, as it could set a precedent for other cases involving crypto assets and securities laws. For instance, it could influence the outcome of the ongoing lawsuits against Binance and Coinbase by the SEC.

The ruling also could encourage more innovation and adoption of crypto assets in the U.S., as it provides more clarity and certainty for developers and users. It could also prompt the SEC to revise its approach and adopt a more balanced and nuanced regulatory framework for crypto assets.

The Future of Ripple and XRP 🌟

The resolution of the case is a major milestone for Ripple and XRP, but it is not the end of their journey. Ripple still faces some challenges and opportunities ahead, such as:

Expanding its global network and partnerships. Ripple has been working with various banks, payment providers, and regulators around the world to promote the adoption of its technology and XRP. Ripple aims to create a more efficient and inclusive global payment system that leverages blockchain and crypto assets.
Developing new products and services. Ripple has been investing in research and development to create new solutions that leverage XRP and other crypto assets. For example, Ripple recently launched a new service called On-Demand Liquidity (ODL), which allows customers to use XRP as a bridge currency to facilitate cross-border payments in real time and at low cost.
Supporting the XRP community and ecosystem. Ripple has been supporting the growth and development of the XRP community and ecosystem, which consists of developers, users, validators, exchanges, wallets, and other stakeholders. Ripple has been funding various initiatives and projects that enhance the utility and innovation of XRP, such as the Xpring platform, the XRPL Labs, and the XRP Ledger Foundation.
Advocating for crypto regulation and education. Ripple has been actively engaging with policymakers, regulators, and educators to advocate for a more favorable and supportive regulatory environment for crypto assets in the U.S. and globally. Ripple has also been educating the public and the media about the benefits and potential of crypto assets, especially XRP.

Conclusion 🙌

The ruling by Judge Torres is a historic moment for Ripple and XRP, as well as for the crypto industry as a whole. It marks the end of a long and contentious legal battle that threatened to derail the future of one of the most popular and innovative crypto assets in the market.

The ruling also sets a precedent for other cases involving crypto assets and securities laws, and could pave the way for more clarity and certainty for the crypto industry in the U.S. It could also inspire more innovation and adoption of crypto assets in various sectors and domains.

The ruling is a testament to the vision and resilience of Ripple and its community, who have been working hard to create a better payment system that leverages blockchain and crypto assets. The ruling also opens up new opportunities and challenges for Ripple and XRP, as they continue to pursue their mission of enabling the Internet of Value.

What do you think about the ruling?
Are you happy with the outcome? How do you think it will affect the future of Ripple and XRP? Let me know in the comments below!

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