Ripple scored a major victory against the U.S. Securities and Exchange Commission (SEC) as a federal judge ruled that XRP is not a security.
The case between Ripple and the SEC has been ongoing since December 2020 when the SEC sued Ripple and its executives alleging that the company’s sales of XRP constituted an unregistered securities offering.
However, on July 13, Judge Analisa Torres granted summary judgment in Ripple’s favor, ruling that XRP is not a security. In her decision, Judge Torres said:
“Defendants’ motion for summary judgment is GRANTED as to the Programmatic Sales, the Other Distributions, and Larsen’s and Garlinghouse’s sales, and DENIED as to the Institutional Sales.”
This means that most of Ripple’s XRP sales were not in violation of securities laws. Only the XRP sales to institutional investors remain in question.
The market reacted positively to the news, with the price of XRP jumping over 25% from around $0.45 to over $0.60 within minutes.
The victory gives Ripple and the broader crypto industry a boost, providing some clarity around the regulatory status of cryptocurrencies. The ruling also casts doubt on the SEC’s motives in bringing the lawsuit against Ripple in the first place.
While not a complete win for Ripple, the summary judgment is a major step in the right direction and a sign that the company and XRP likely have a pathway forward within the SEC’s regulatory framework. The case is still ongoing with regard to XRP sales to institutional investors.
Overall, the decision provides more solid ground for the argument that cryptocurrencies with decentralized governance structures and certain utility functions are not securities under the law. It remains to be seen how the SEC will respond to this interpretation.