The U.S. Securities and Exchange Commission (SEC) suffered a setback in its prolonged legal battle with Ripple as the presiding judge in the case rejected their appeal on whether the cryptocurrency XRP should be considered a security. This ruling has sent shockwaves through the cryptocurrency market and marks a significant turning point in a lawsuit that has been ongoing since 2021.
According to the ruling issued on October 3rd (U.S. time), the court determined that XRP is not a security in all instances, dismissing the SEC’s argument that this digital currency must adhere to U.S. securities regulations. This means that XRP can only be considered a security in direct sales to investment funds or third parties but not when traded through an exchange order book.
This marks a significant victory for Ripple in this complex lawsuit. Earlier, in July 2023, the court had issued a similar decision emphasizing that XRP only needs to comply with securities regulations in specific cases. The lawsuit began in 2021 when the SEC accused Ripple of unlawfully selling XRP securities and profiting over $1.3 billion.
Under the guidance of Chairman Gary Gensler, the SEC had submitted an appeal to the court, but the latest ruling rejected this appeal, citing that the SEC did not provide sufficient evidence for their argument.
While Ripple has achieved a major victory in this battle, the fight is far from over. It is expected that the U.S. Securities and Exchange Commission and Ripple will continue to face off in another trial in April 2023 to resolve lingering issues. This provides an opportunity for the SEC to reverse the tide in the future, and both parties will have to submit relevant documents for the litigation process in December 2023.
Market reactions shortly after the ruling reflected the volatility. XRP prices surged nearly 8% following news of the SEC’s unsuccessful appeal but later retraced to previous price levels. The cryptocurrency market continues to witness uncertainty regarding the future of regulation and oversight in the industry.
While this legal battle is far from over, the cryptocurrency market and community await the next developments in this case and its implications for cryptocurrency regulation in the United States.