RULING: The judge in charge of the case delivered his verdict on the matter by stating that the sale of XRP tokens on crypto exchanges did not constitute investment contracts.
Thursday 13th July marked a turning point in the case between Ripple and the SEC. Indeed, the judge in charge of the case delivered his verdict on the matter by stating that the sale of XRP tokens on crypto exchanges did not constitute investment contracts.
Following this news, the price of XRP skyrocketed by more than 96%, going so far as to rise to fourth place in the market in terms of market capitalisation, thus dethroning BNB.
The evolution curve of XRP resumes its bullish movement
Less than an hour after the remarks made by the American judge, the XRP token saw its value climb by almost 29%. At that time, the price of XRP was above the $0.60 mark while long before this news, the cryptocurrency was trading at around $0.47 during the previous day.
According to the data on the price trend graph, the cryptocurrency that powers Ripple’s payment ecosystem had not reached the $0.60 zone again since May 2022. This period had in fact preceded the drastic market drop that affected the entire crypto industry.
Furthermore, the price of Ripple has also fallen over these years in a big way due to the legal troubles coming from the constant attacks by the SEC.
Later in the day, the XRP token climbed as high as $0.87, according to data from CoinMarketCap, its highest level since March 2022, before stabilizing at $0.77 at the time of this publication.
The reasons for the explosion of XRP
It’s pretty obvious that the recent XRP price action by traders is tied to the latest news coming out of the court for the Southern District of New York. A new judgment issued by the judge states that the offer and sale of XRP on digital asset exchanges does not represent offers and sales of investment contracts.
XRP is not a security.
This victory for @Ripple is a win for the entire industry and a step toward regulatory clarity in the U.S.
— Ripple (@Ripple) July 13, 2023
According to the judge, the data present in the file submitted to the court does not establish the third part of the Howey test for these transactions.
Although the impact of this decision cannot yet be fully measured, it could set a positive precedent for the entire industry. According to the words of the judge, the scheduled sales of XRP cannot be securities. On the other hand, institutional sales of XRP make it possible to consider the token as a security.
This potentially sets the stage for a new paradigm in which not only how a cryptocurrency might sell, but also the marketing and related messaging, can dictate whether or not it is a security.
The most important part of this ruling:
“XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract.”
This is a now a matter of law (not up for trial.)
— Brad Garlinghouse (@bgarlinghouse) July 13, 2023
Brad Garlinghouse, CEO of Ripple Labs, welcomed the decision in a tweet hours after the judgment. On his official Twitter account, he reaffirmed his company’s position and his desire to remain on the side of the law and the good side of history.
Good news so far
Beyond the news of Ripple’s victory over the SEC, the fight is not over yet. Indeed, at the end of the hearing between the parties, we note that a request from the SEC was accepted in part and rejected in part by the court. The same applies with regards to Ripple where one of their request was also partially accepted.
For cryptocurrency experts, it is highly likely that this case will go to trial later.
As a reminder, Ripple has been in conflict with the SEC since 2020 after the regulator filed a lawsuit against XRP’s parent company for unauthorized selling of what it calls financial securities.
In addition, XRP, Polygon and Solana, which are also in the sights of the SEC, have seen a sharp rise following this good news, with in particular a growth of 31.85% for SOL and 18.11% for MATIC in the space of the last 24 hours.