Ripple Labs has scored a major court victory after the federal judge presiding over the American blockchain payments company’s case against the Securities and Exchange Commission ruled that the XRP token is not a security.
Following the monumental ruling that could essentially reshape the crypto industry, XRP exploded by over 35%.
Judge Delivers Vital Summary Judgment Verdict
U.S. District Judge Analisa Torres has granted summary judgment in favor of Ripple, indicating that the XRP token is not a security.
Torres asserted that programmatic sales to public buyers and distributions of XRP to Ripple’s employees did not constitute the sale of unregistered securities.
She, however, ruled that $728 million worth of contracts for institutional sales did constitute unregistered securities sales and those investors “would have purchased XRP with the expectation that they would derive profits from Ripple’s efforts.”
Torres noted: “Therefore, having considered the economic reality and totality of circumstances surrounding the Institutional Sales, the Court concludes that Ripple’s Institutional Sales of XRP constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act.”
In the lawsuit lodged in December 2020 by the SEC against Ripple and its executives CEO Brad Garlinghouse and co-founder Christian Larsen, the regulator aimed to compel Ripple to stop offering XRP to customers under the assertion that XRP was a security.
By granting the summary judgment motion, Torres leaves the case open until a jury can weigh in at trial or if Ripple and SEC reach a settlement.
XRP Skyrockets 35.5%
The positive ruling sent a ripple across the market after the sixth-biggest cryptocurrency by market cap dodged a securities classification. XRP surged from $0.45 to $0.63. This puts the token up over 35.5% as of the time of publication, according to data from CoinGecko.
Crypto analyst Adam Cochran observed that the ruling was a “big win for XRP” given its centralized foundation, with key figureheads, standard sales through exchanges, and formal distribution programs.
“We said in Dec 2020 that we were on the right side of the law and will be on the right side of history,” Ripple chief Brad Garlinghouse said in a tweet. “Thankful to everyone who helped us get to today’s decision — one that is for all crypto innovation in the US. More to come.”