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In a bid to put more regulations on the crypto space, the SEC has been at the necks of crypto projects, crypto companies and anything related to cryptocurrency. We have since heard that they have sued multiple crypto companies like Coinbase and binance in a bid to force them to accept and be under control by their rules. Well even though the SEC has gone after Coinbase and Binance in 2023, they have been at the necks of other big projects since.
Things seem to be getting clearer by the day as the court cases against the projects and companies are finally taking place.
Ripple Vs SEC
Ripple Vs SEC has been an ongoing case since 2020. In 2020, the SEC decided to sue ripple for selling xrp, their native token to investors without registering it as a security. In the lawsuit, SEC wanted to sue ripple cause they claimed that the Xrp token is a security and as such should be registered which will allow it to be under more regulation.
Ripple on the other hand argue that Xrp is not a security and as such they won’t register it as a security. In 2013, ripple sold a total of 1.4 billion dollars in an ICO to investors in an unregistered security offering which the SEC wanted them to do.
The SEC after making the arguments decided to take ripple labs including 2 of its executives Brad Garlinghouse and Christian Larsen to court. They sued them for selling an unregulated security to the public and as such wish the court ruled in the SEC’s favour.
Well, regulations in crypto are a new thing. It’s common to see this kind of regulation in the stock market but with cryptocurrency and its decentralized nature, it’s hard to really classify any coin or token as a security. What classifies a token as security is quite simple in the SEC’s books. As soon as that token is deemed “investment contract” it should be considered a security. This means that the token is sold to “benefit or derive profit from the efforts of others”
Ripple Labs With A Partial Win
Now, in July 2023 a state judge in the US has ruled in favour of ripple. What this means for ripple is that the state judge has ruled in favour of ripple labs saying that their token xrp is not a security and as such don’t qualify to be regulated.
What this means is that, when ripple was selling xrp it was not a security but if they had sold it to institutional investors it would have been considered as a security which is unregistered when sold to institutional investors.
What the SEC was seeking to make clear is that ripple should have registered xrp as a security which would have allowed the SEC to closely monitor everything ripple was doing with the token. But since they didn’t register it the SEC argued that ripple did it so they could only disclose information they wanted to disclose.
Even though ripple won the case; at least for now, SEC was awarded a partial victory as the court stated ripple sold part of the token to rich investors. This meant that ripple aimed to take the token to institutional investors which will qualify it as a security. The court case is not done yet as the SEC can still apply against the ruling.
Ever since the announcement of the win for ripple the crypto market has seen a pump in prices. Xrp has seen a significant surge in price as well. Coinbase which stopped its users from trading xrp is now allowing customers to trade xrp on its exchange.
This news doesn’t just mean it’s a win for ripple labs, it’s also a win for the whole crypto space as ripple is the first to win a lawsuit against the SEC. This will give or boost the morale of other companies or exchanges which have been sued by the SEC as well.
Let’s see what the final judgement will be from the jury but for now, it’s a big win for the crypto space.
Posted Using LeoFinance Alpha