In a U.S. court filing on Thursday, Judge Analisa Torres said that the sale of XRP tokens worth $728.9 million to institutional buyers would be considered as selling unregistered securities offerings. However, this does not apply to sales of XRP to the public.
The U.S. Securities and Exchange Commission’s (SEC) case against Ripple Labs started in late 2020. And it was aimed at knowing whether Ripple’s XRP token is a commodity or a security.
The SEC filed a lawsuit against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen in December 2020, accusing them of selling unregistered securities. At the heart of the legal debate was the 1946 ‘Howey Test’ which is used in the U.S. to define investment contracts and securities. However, large sections of crypto traders say the 20th century conditions should not apply to 21st century digital assets.
“XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract,” said the court filing.
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SEC vs Ripple was marked by numerous delays and large-scale requests for information from both parties, even as thousands of XRP owners initiated legal proceedings of their own.
The lengthy case took a toll on XRP’s value and presence, with many trading exchanges de-listing the asset and owners complaining they could not access their XRP. However, the ruling caused traders to rejoice as XRP’s value jumped by over 65% in the last day, bringing its price to around $0.7873 per coin. XRP was the fourth biggest cryptocurrency by market capitalisation on Friday.
The token was intended to enable users to make financial transactions across diverse currencies without losing time and money in foreign currency exchange fees. However, as a cryptocurrency, XRP’s price was prone to fluctuation and many people buy crypto assets to hold them for profit.
The case is ongoing, and will go on jury trial to decide on other details.
