The value of Ripple’s XRP coin increased on Thursday after a judge in the Southern District of New York determined that it is “not necessarily a security on its face,” and got the sweet end for this SEC Vs. Ripple fight.
According to Coin Metrics, the price of XRP last increased by 71% to around 80 cents per token.
The information offered cryptocurrency investors hope and made them relieved that perhaps other cryptocurrencies are also not securities after all. The MATIC token of Polygon increased 17.82%. The Solana and Litecoin both increased by 18.35%, and the Cardano token increased by 20.31%.
Additionally, the price of Bitcoin and Ether increased by over 4% and 6%, respectively.
On Thursday afternoon, Coinbase, which had previously delisted XRP from its trading platform, tweeted that it would now permit the asset’s trade once more. In a statement, another crypto exchange, Gemini, stated that it is “exploring the listing of XRP for both spot and derivatives trading.”
Chris Martin, the head of research at Amberdata, explained that the judgments rendered today represent a significant advancement for the sector.
The SEC will have to change how they approach several of their pending cases as a result of the finding that XRP is not a security. He also anticipated that this judgment will involve several additional tokens as non-securities.
Martin continued: “The decision that Ripple’s institutional sales of XRP constitute securities obviously has significant consequences for the industry with multiple ICO’s likely now in the limelight.
For exchanges involved in ongoing SEC lawsuits, it’s unclear how this ruling will impact them because, for the most part, they’ve only been involved in secondary transactions. However, as we can see from the pricing today, the market is highly optimistic about the verdicts.”
The announcement represents the most recent development in a three-year conflict between Ripple and the Securities and Exchange Commission. It’s possible that some of these conclusions will be overturned on appeal. In fact, the petition stated that the court will determine the trial date in a subsequent order.
By offering to sell XRP without first registering it with the SEC, Ripple violated American securities laws, and the SEC filed a lawsuit against the company in 2020.
The decision was widely regarded as an important barrier to overcome in the second half of 2023 because crypto assets are still coping with a difficult macroeconomic environment and have been subject to intense pressure from American regulators over the past few weeks, highlighted by lawsuits the SEC filed against Coinbase and Binance in June.
After the decision, shares of Coinbase increased by more than 24% in hopes that the business would succeed in its own legal dispute with the SEC. Robinhood and Block, which provide cryptocurrency trading services, saw increases of 4.3% and 7%, respectively. Microstrategy, a Bitcoin proxy, increased by approximately 12%. Miners increased by ten percent.
The decision on Thursday has investors feeling optimistic, but it’s not a definite success. Stephen Palley, a partner at Brown Rudnick, argued that it is incorrect to state categorically that XRP is not a security.
But he went on to say, “If I were an XRP holder, I’d be happy right now.”
Institutional sales, programmatic sales, and “other distributions,” such as staff compensation, were split into three types of factual circumstances underlying the sale of XRP in the judgment.
Regarding “Ripple’s Institutional Sales of XRP to Sophisticated Individuals and Entities,” the court agreed with the SEC, stating that these were securities transactions and amounted to financial investment. However, Ripple triumphed when it came to distributions and “programmatic” sales, or sales done using trading algorithms.
The filing stated that the “Court concludes that Ripple’s Programmatic Sales of XRP did not constitute the offer and sale of investment contracts” and that the “other distributions” did not show the “‘investment of money’ as part of the transaction or scheme” after taking into account the economic reality and totality of the circumstances.
Palley brought up another important point: whether cryptocurrency exchanges like Coinbase must register as securities exchanges themselves.
The SEC has made it plain that the majority of traded crypto assets should be regarded as securities. However, the court did not come to a decision on the case, which was another victory for Ripple, according to Palley.
Crypto market players celebrated the decision, driving the price of XRP up to 74% at the moment. However, a number of crypto community professionals have adopted a pessimistic viewpoint.
These experts examined Judge Torres’ decision on XRP and found the flaws that might harm the ecosystem’s traders.
The creator of dYdX, Antonio Juliano, questions how other cryptocurrencies can benefit if a token like XRP, which serves no purpose other than to be dumped in the open market, is not considered a security.
Participants in the cryptocurrency market are cautioned by Juliano’s warnings about “pump and dump” operations.
Pump and dump strategies have impacted players in the cryptocurrency industry for years. Projects that put their token on Coinmarketcap or CoinGecko after it is listed on an exchange, attracting throngs of investors who then dump the tokens on exchanges.
The crypto ecosystem may suffer due to Judge Analisa Torres’ decision to classify XRP as a non-security in its secondary market sales, creating opportunities for “pump and dump” schemes and initiatives.
Preston Byrne, a partner at Brown Rudnick and a cryptocurrency entrepreneur, thinks XRP’s future is still bright. The SEC is presently evaluating the ruling, which would indicate that trial in the case will happen shortly.