Crypto Industry Scores Quick Victory in Legal Battle With Regulators

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The cryptocurrency industry won a quick victory in its legal battle with U.S. regulators when a federal judge ruled on Thursday that the sale on public exchanges of a digital asset called XRP complied with securities laws. movables.

For years, the Securities and Exchange Commission has argued that digital assets are securities, like stocks and bonds traded on Wall Street, and should be subject to the same strict regulations. Last month, the SEC sued two of the biggest crypto exchanges, Coinbase and Binance, accusing them of marketing unregistered securities to the public.

But Thursday’s ruling in a case involving crypto firm Ripple could complicate that argument and provide fodder for the crypto industry to defend itself in court.

The SEC sued Ripple in December 2020, accusing the company of violating securities laws in one of the first major legal fights involving cryptocurrencies. In Thursday’s 34-page ruling, Judge Analisa Torres of the U.S. District Court for the Southern District of New York said Ripple did not break the law when the cryptocurrency it created, XRP, was sold on public exchanges.

The decision was not a complete victory for the industry. Judge Torres also found that Ripple violated securities law by selling XRP to institutional investors, such as sophisticated hedge funds.

An SEC spokesperson said in a statement that the agency is reviewing the decision. We are pleased that the court found that XRP tokens were offered and sold by Ripple as investment contracts in violation of securities laws under certain circumstances, the statement said.

A representative for Ripple did not immediately respond to a request for comment.

Ripple was founded in 2012 by a group of developers including Chris Larsen, who has long been ranked among the richest crypto executives in the world. The company’s mission was to facilitate international payments using the XRP token.

Over the years, the token has become one of the most valuable cryptocurrencies in the market, and Ripple has developed a loyal online following. But the SEC lawsuit has cast a veil over the company.

A resolution in the case had been widely anticipated in the crypto industry, and prominent executives celebrated Judge Torres’ ruling as a significant victory.

Huge win today, Ripples Chief Legal Officer Stuart Alderoty wrote on Twitter. Stock market sales are not securities.

Tyler Winklevoss, one of the founders of the Gemini exchange, tweeted, Adios Gary, a reference to Gary Gensler, the SEC Chairman who led the government crackdown on the crypto industry.

But the Ripple decision does not mean the crypto industry will win its other business. In the lawsuits against Binance and Coinbase, the SEC argued that a wide range of cryptocurrencies constitute securities. Judges in those cases will have to separately determine whether the sale of those digital assets broke the law.

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