Ripple Wins Partial Victory In Securities Case
In a significant development, Ripple Labs achieved a partial victory in court on Thursday as a federal judge ruled that some of its XRP token sales did not fully meet the definition of a securities offering, as challenged by the Securities and Exchange Commission (SEC). Although this decision does not entirely absolve Ripple or its top executives from potential civil consequences, it dealt a blow to the SEC’s undefeated track record in enforcement cases against crypto firms.
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.
A huge thank you to @bgarlinghouse, @chrislarsensf, and @s_alderoty for their leadership and the #XRPCommunity for their continued support.
— Ripple (@Ripple) July 13, 2023
Trial in Securities Sales Case
Judge Analisa Torres of the Southern District of New York ordered a jury trial for Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen to determine their liability in the alleged illegal securities sales to institutional investors who purchased hundreds of millions of dollars’ worth of XRP. This trial will test the extent of their involvement.
Crypto industry enthusiasts celebrated the ruling as a crack in the SEC’s armour. The SEC, however, stated that it is still reviewing the decision for possible appeal, indicating that the legal battle may continue. The full impact of the ruling will unfold over the coming months as Ripple and the SEC potentially pursue appeals.
Victory for Ripple
Judge Torres ruled that Ripple’s “blind bid” sales, where the company used an algorithm to sell XRP without knowing the bidders’ identity, did not constitute a securities offering. She emphasized that buyers could not have known if their payments went to Ripple or any other seller of XRP. Notably, these programmatic sales accounted for less than one percent of global XRP transactions since 2017. The judge indicated that transactions where the buyer did not know Ripple was the seller or occurred on the secondary market would not qualify as investments in the company and, therefore, as illicit securities sales.
While the ruling did not entirely absolve Ripple and its executives, legal experts interpreted the judgment as a victory for both Ripple and the broader crypto industry. The ruling suggests that secondary sales of XRP may not be considered securities transactions, potentially impacting the secondary market for digital assets. Industry arguments in other cases, such as the SEC’s lawsuit against Coinbase, could also be bolstered by this ruling.
