Ripple has achieved a significant victory in a ruling regarding the sale of its XRP token, with a US judge determining that these transactions on public exchanges and through algorithms did not breach federal securities laws. This outcome is considered a major advancement for the cryptocurrency sector.
However, the decision was only partially in Ripple’s favor, as US District Judge Analisa Torres also found that the institutional sale of XRP did violate federal securities laws. Despite this mixed ruling, the market responded positively, with XRP’s price soaring by 75% on Thursday. Ripple CEO Brad Garlinghouse stated to Reuters that the ruling is “a huge win for Ripple but more importantly for the industry overall in the US.”
In response to the ruling, crypto exchange Coinbase announced it would reinstate XRP on its platform, leading to a jump of over 20% in its own stock price. The Securities and Exchange Commission (SEC) initially filed a lawsuit against Ripple, Garlinghouse, and co-founder Christian Larsen in 2020, claiming they raised more than $1.3 billion through an unregistered digital asset securities offering.
The judge concluded that “programmatic” sales conducted via exchanges and algorithms did not constitute offers of securities under the law, as it could not be conclusively stated that buyers had a “reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”