The Securities and Exchange Commission’s crypto-containing warpath got a new speedbump this week asĀ a U.S. judge ruled that Ripple’s XRP token is “not necessarily a security on its face.” That face, and those of other altcoins, ended the week with broad smiles, and prices up across the board.
As court rulings go,Ā the call made byĀ federal district judge Analisa Torres brought both good news and bad news for theĀ Securities and Exchange Commission’s case against Ripple Labs and its XRP token.
Contrary to the SEC’s assertion, the judge said thatĀ programmatic sales to the public and distributions of XRP to Ripple Labs employees did not constitute the sale of unregistered securities. Sales via exchanges were left unremarked upon.
However, she also found thatĀ $728 million worth of XRP sales did constitute unregistered securities sales as they were made toĀ institutional investors who “would have purchased XRP with the expectation that they would derive profits from Rippleās efforts.”
Ripple CEO Brad Garlinghouse said the rulingĀ “is the wake-up call that Congress needs,”Ā as itĀ “directly undercuts the SECās claims that nearly all tokens are inherently securities ā likely to set a positive precedent for other digital tokens in the US.”
Ripple Labs’ XRP is unquestionably the toast of the town. A federal judge’s ruling that its sales do not always qualify as subject to securities law indeed rippled across the industry, sendingĀ XRP prices skyrocketing, triggering a new season of altcoin gains, andĀ giving the stalwart Ethereum a boost.
The newsĀ caused fellow tokensĀ Polygon, Solana (SOL) and Cardano (ADA) to spike by double-digit percentages on Thursday, altogether pushing cryptoās total market cap to $1.3 trillion on Friday.
Not investment advice. Some crypto products and markets are unregulated. The unpredictable nature of the cryptoasset markets can lead to loss of funds and profits may be subject to capital gains tax.
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