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US Federal Judge Partially Sides with Ripple in SEC Lawsuit, Allows Re-listing of XRP


In a significant development, a US federal judge has ruled in favor of Ripple Labs in their ongoing Securities and Exchange Commission (SEC) lawsuit, alleging that the San Francisco-based blockchain developer made unregistered security deals with its XRP token.

In response to requests from Ripple and the SEC for a summary decision, the court ruled that Ripple’s sale of institutional XRP was an unregistered offering of securities, whereas a programmatic sale was not. This ruling marks an important difference in the court’s evaluation of the legal status of the XRP token.

The court’s decision emphasized that the economic reality of Ripple’s programmatic sales did not meet the criteria of the Howey test, which define investment contracts. This highlights that most people who buy XRP from digital asset exchanges are not investing in Ripple. Institutional buyers, on the other hand, buy XRP directly from Ripple and are considered part of a shared company tied to the success of other institutional buyers.

While the SEC’s motion for a brief judgment was granted regarding the institutional sale, the court dismissed it on other aspects. Ripple’s motion for summary judgment was granted regarding program sales, other distributions, and sales made by Brad Garlinghouse and Chris Larsen.

Notably, the court ruled that the SEC did not need to prove that Larsen and Garlinghouse were aware of Ripple’s breaches, but instead considered the disputed facts surrounding the case. This ruling acknowledges the complexity of the situation and leaves room for interpretation.

The ruling comes after a three-year legal battle and could set a precedent for future token classification cases. Ripple co-founder Brad Garlinghouse responded to the verdict, expressing his belief that Ripple is on the right side of the law and will be on the right side of history.

The role of the “Hinman document” – the SEC’s internal drafts and emails linked to the former director’s speech – was also highlighted during the legal proceedings. The documents indicate a potential conflict of interest and raise questions about the SEC’s selectivity in project targeting. However, the actual impact of these documents on the outcome remains unclear.

Following the decision, there may be potential changes in the SEC’s approach to token classification and enforcement action. The outcome of the Ripple case could have implications for other cryptocurrencies and token issuers, shaping future regulatory decisions within the crypto industry.


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