“The virtual currency XRP itself is not a security,” US district court rules

Judgment in XRP Trial

U.S. District Court Judge Analisa Torres today issued a partial ruling on the XRP case, which began with a December 2020 lawsuit by the U.S. Securities and Exchange Commission (SEC).

The judge accepted Ripple’s allegation, except for accepting the SEC’s claim that the sale of the crypto asset (virtual currency) XRP to institutional investors was a transaction of unregistered securities.XRP as a digital token itself is not a securityI decided. Ripple’s Chief Legal Officer, Stuart Alderotti, said the ruling was a “huge win.”

A huge win today – as a matter of law – XRP is not a security. Also a matter of law – sales on exchanges are not securities. Sales by executives are not securities. not securities.

—Stuart Alderoty (@s_alderoty) July 13, 2023

connection: Summary of the “Ripple trial” filed by the US SEC (December 2020-April 23)

The judge ruled that the sale of programmed XRP on exchanges, including those of defendants Brad Garlinghouse and Chris Larsen, did not meet the Howie Test’s “expectation of profit from the efforts of others” requirement. It was pointed out that the

Institutional investors could have expected Ripple to use the money from the XRP sale to develop the XRP ecosystem and the price of XRP would rise, but ordinary investors using secondary exchanges should expect the same. was not possible.

Exchange users could not know whether their money would go to Ripple or another seller, he said. Garlinghouse and Larsen also said they didn’t know who they sold the XRP to, and that the buyer didn’t know who the seller was.

Attorney Jeremy Hogan, who is familiar with the XPR case, said that although the judge did not mention the secondary market, according to the ruling, most of the XRP in circulation in the world would not be a security. showed the point of view.

6. As expected, the individual Defendant’s issues will go to trial.

7. She does NOT address secondary markets sales but, per this Order, MOST OF THE XRP OUT IN THE WORLD ARE NOT SECURITIES. And so, with a fungible token, it’s not logically possible….

— Jeremy Hogan (@attorneyjeremy1) July 13, 2023

The market reacted strongly to this ruling. As of this writing, the price of XRP has skyrocketed by more than 70% over a 24-hour period (see CoinGecko).

Coinbase, which had suspended XRP trading due to a lawsuit filed by the SEC, announced on the 14th that it would resume trading.

XRP (XRP) is now live on https://t.co/CD3RBjtMAO & in the Coinbase iOS & Android apps. Coinbase customers can log in to buy, sell, convert, send, receive or store this asset.

—Coinbase Assets (@CoinbaseAssets) July 13, 2023

connection: XRP is relisted on Coinbase following the judgment of the Ripple trial | Summary of important bulletins on the morning of the 14th

Parties’ Comments

Garlinghouse, CEO of Ripple, commented on the verdict:

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.

—Brad Garlinghouse (@bgarlinghouse) July 13, 2023

Also, according to The Block, an SEC representative suggested the possibility of an appeal and commented:

The SEC’s allegations have also been partially accepted, so Ripple may file an appeal.

connection: Ripple trial, SEC’s Hinman lecture material released to the public after 5 years

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