In a significant victory for the cryptocurrency industry, a federal judge ruled that the sale of XRP, a digital asset, on public exchanges complied with securities laws. This ruling is expected to complicate the Securities and Exchange Commission’s (SEC) argument that digital assets should be subject to strict regulations similar to stocks and bonds traded on Wall Street.
The SEC had previously sued major crypto exchanges Coinbase and Binance for marketing unregistered securities to the public. However, Judge Analisa Torres of the U.S. District Court for the Southern District of New York’s 34-page ruling in the case involving Ripple, a crypto company, challenges the SEC’s position. The judge stated that Ripple did not violate the law when it sold XRP on public exchanges.
While this ruling was a partial victory for the industry, as the judge found Ripple in violation of securities laws for selling XRP to institutional investors, it still provides leverage for the crypto industry to defend itself in court. The SEC is currently reviewing the decision, and a spokesman for the agency acknowledged that XRP tokens were offered and sold by Ripple as investment contracts in certain circumstances.
Ripple, founded in 2012, aimed to simplify international payments using the XRP token. Over the years, XRP became one of the most valuable cryptocurrencies, but the SEC’s lawsuit had a negative impact on Ripple’s reputation, leading some exchanges to delist XRP.
Executives in the crypto industry celebrated Judge Torres’ ruling as a significant victory. However, it’s important to note that this ruling does not guarantee similar outcomes in other cases involving cryptocurrencies. The lawsuits against Coinbase and Binance are ongoing, and judges in those cases will have to make separate determinations regarding the legality of the digital assets sold on those platforms.
Overall, this ruling provides a boost to the crypto industry’s defense against the SEC’s regulatory efforts, but the ultimate outcome of these legal battles remains to be seen.
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