The crypto industry has an early victory in its legal battle with U.S. regulators Thursday after a federal judge ruled that the sale of a digital asset called XRP on public exchanges complies with securities laws. I got it.
The Securities and Exchange Commission has long argued that digital assets constitute securities, just like stocks and bonds traded on Wall Street, and should be subject to the same stringent regulations. Last month, the SEC sued two of the largest cryptocurrency exchanges, Coinbase and Binance, for selling unregistered securities to the public.
However, Thursday’s ruling in a lawsuit involving cryptocurrency company Ripple complicates that debate and could provide a defense for the crypto industry in court.
In December 2020, the SEC sued Ripple for violating securities laws in one of the first major legal battles involving cryptocurrencies. In Thursday’s 34-page ruling, U.S. District Judge Annalisa Torres of the United States District Court for the Southern District of New York ruled that Ripple would be in violation of the law if its cryptocurrency, XRP, was sold on public exchanges. said no.
The ruling was not an outright victory for the industry. Judge Torres also found that Ripple violated securities laws when it sold XRP to sophisticated hedge funds and other institutional investors.
An SEC spokesperson said in a statement that the SEC is considering the decision. “We are pleased that the court found that Ripple offered and sold XRP tokens as investment contracts that violated securities laws under certain circumstances,” the statement said.
A representative for Ripple did not respond to a request for comment.
Ripple was founded in 2012 by a group of developers including: Chris Larsen, he has long been ranked among the richest cryptocurrency executives in the world. The company’s mission was to make international payments easy using the XRP token.
Over the years, the token has become one of the most valuable cryptocurrencies on the market and Ripple has developed a loyal following online. But the SEC lawsuit cast a dark cloud over the company.
The resolution of the case has been widely anticipated in the cryptocurrency industry, with prominent executives celebrating Judge Torres’ ruling as an important victory.
“Today is a big win,” said Ripple Chief Legal Officer Stuart Arderoti. I have written on Twitter. “Exchange sales are not securities.”
Tyler Winklevoss, one of the founders of the Gemini exchange, said: tweeted“Adios Gary” refers to SEC Chairman Gary Gensler, who has led the government crackdown on the cryptocurrency industry.
However, the Ripple ruling does not mean that the crypto industry will win other lawsuits. In its lawsuit against Binance and Coinbase, the SEC argued that a wide range of cryptocurrencies are securities. Judges in these cases will have to make separate decisions on whether the sale of digital assets violated the law.