As the year 2023 draws to a close, Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, has declared the outcome of the Ripple vs. SEC lawsuit as the “Biggest Crypto Story of 2023.”
The focal point of this groundbreaking development is the ruling by Judge Analisa Torres, who determined that XRP, the native cryptocurrency of Ripple, is not a security earlier. In a tweet on Wednesday, Alderoty highlighted the magnitude of the decision, emphasizing that it represented SEC Chair Gary Gensler’s “worst loss” and reshaped the regulatory environment for digital assets.
“Biggest crypto story of 2023: Gary Gensler suffered his “worst loss” when Judge Torres ruled that XRP is not a security…Tokens themselves are not securities. That’s the law of the land.” Wrote Alderoty.
The legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) had been ongoing for nearly three years. The SEC had alleged in 2020 that XRP was an investment contract falling under the purview of securities regulations. However, in July, Judge Torres categorically rejected this claim, stating that XRP is no longer qualified as a security.
The court’s decision was based on a comprehensive evaluation of the nature of XRP, including its programmatic sales and other distributions. The ruling clarified that while Ripple’s direct sales to institutional investors might constitute an investment contract, XRP’s overall security classification was dismissed.
The legal saga between Ripple and the SEC is far from over. The remedies phase, set to commence in February 2024, will determine the penalties Ripple may face for its past actions. The SEC has signalled its intention to appeal the federal court’s summary judgment, and the upcoming phase will likely shape the trajectory of this prolonged legal duel.
That said, as the end of 2023 nears, the scrutiny of crypto firms by the SEC persists, fueling discussions among industry experts about the potential implications for the regulatory landscape of digital assets in the United States. Notably, Coinbase stands at a pivotal juncture in its battle against SEC securities violation allegations, with the recent denial of Coinbase’s petition for rulemaking setting the stage for forthcoming oral arguments and a definitive decision, most likely in 2024.
Meanwhile, Binance, having settled for a multi-billion amount, grapples with an SEC lawsuit accusing it of securities violations. On the other hand, the company’s founder, Changpeng Zhao, now awaits a sentencing hearing on February 23 after admitting guilt to charges linked to money laundering and terrorism financing.