Ripple Scores a Win as Judge Rules XRP Sales Aren’t Investment Contracts

Ripple Scores a Win as Judge Rules XRP Sales Aren’t Investment Contracts

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In a significant legal victory for Ripple, US District Judge Analisa Torres has ruled in the company’s favor in the lawsuit filed against it by the US Securities and Exchange Commission (SEC) back in December 2020. The SEC had claimed that Ripple had raised over $1.3 billion through the sale of XRP, which it argued should be classified as securities.

Court’s Verdict: Ripple’s Favor

However, the court disagreed, stating that programmatic XRP sales did not constitute investment contracts as they lacked the economic reality of institutional sales. This, according to the court, meant there was no “reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”

Ripple’s Triumph Over SEC’s Allegations

The court ruling clarified that institutional buyers who directly purchased XRP from Ripple could reasonably expect their investment to contribute to the improvement of the XRP ecosystem and increase the value of XRP. However, programmatic buyers, who accounted for less than 1% of global XRP trading volume, were involved in “blind bid/ask transactions” where buyers could not have known if their payments went to Ripple or any other seller of XRP.

Implications of the Ruling

This ruling provides much-needed regulatory clarity for the cryptocurrency industry and clarifies the legal status of XRP. However, the SEC may appeal the decision, and the legal battle is likely far from over. Despite this, Ripple’s victory is a significant boost for the company, which has long argued that XRP is a legitimate cryptocurrency used for cross-border payments and not subject to SEC regulation.

Impact on XRP’s Value

The recent court ruling in favor of Ripple has significantly impacted XRP’s price, which surged by over 23% within hours of the decision. XRP reached a high of $0.6472, up from its earlier price of around $0.473. The legal victory for Ripple removes a major source of uncertainty for the cryptocurrency and provides much-needed regulatory clarity for the industry.

The Road Ahead

Many analysts had previously predicted that XRP could reach the $1 mark, and the recent court ruling has brought this closer to reality. The cryptocurrency has been on an upward trend since the start of the year, and the legal victory for Ripple is expected to accelerate this trend. Experts believe the ruling could also lead to a resurgence of interest in XRP among institutional investors, who had been cautious due to the SEC’s lawsuit.

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