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XRP Cryptocurrency Sales On The Open Market Aren’t Securities, Court Rules

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XRP Cryptocurrency Sales On The Open Market Aren't Securities, Court Rules

(CTN News) – We XRP all anticipated it was going to be a showdown between the Securities and Exchange Commission (SEC) and Ripple, the company behind the popular XRP token, the one everyone was eagerly anticipating.

In its lawsuit, the SEC asserted that sales of XRP constituted offering unregistered securities, while Ripple defended its $25 billion market, scolding the SEC for not providing a clear definition of unregistered securities.

In a ruling issued on Thursday, a federal judge partially sided with Ripple-and with the broader crypto industry as a whole-appearing to be the early winners.

It has been an existential question for the U.S. crypto industry whether the thousands of tokens, from Bitcoin to Ether to Dogecoin and Pepecoin, are securities, which require SEC registration.

It has been argued by crypto firms that working with the SEC is impossible under the current rules, while the SEC has accused nearly every token of operating illegally, with the exception of Bitcoin.

In the course of the debate, Ripple became an important trial balloon. In 2020, the Securities and Exchange Commission charged the company and two of its executives with raising over $1.3 billion through an unregistered offering of digital assets securities.

As opposed to other SEC lawsuits, Ripple has challenged the case, which has been litigated for three years in the Southern District of New York.

The proceedings have captivated the crypto industry, particularly since the SEC has aggressively pursued other exchanges and projects for allegedly offering unregistered securities.

The decision that XRP is not a security may buoy other firms and weaken the SEC’s lawsuits against the industry, while a victory for the SEC would have been disastrous and may have climbed to the Supreme Court.

Although the case progressed, some crypto participants feared that it could set back the industry, particularly as the former SEC director’s emails were released that Ripple’s lawyers claimed supported its “fair notice defense,” which argues the agency has not provided adequate information on its legal interpretations.

XRP Army is an army of loyal and sometimes toxic supporters who openly attack critics of Ripple (many other projects have argued that their tokens are not securities since they are decentralized).

According to the results released on Thursday, there is a mixed bag of results. According to the 34-page decision of Judge Analisa Torres, Ripple’s institutional sales of XRP constitute unregistered securities.

The institutional sales, which were arranged with buyers such as hedge funds, amounted to approximately $728 million.

Torres also found that programmatic sales, which occur on the open market, such as exchanges, are not investment contracts.

Accordingly, the vast majority of individuals who purchased XRP from digital asset exchanges did not invest their funds in Ripple.

Torres rejected Ripple’s fair notice defense-an argument used by other firms in their SEC lawsuits, including Coinbase-stating that the Howey test for determining what constitutes an investment contract is clear.

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