In a recent court filing on Thursday, Judge Analisa Torres made a significant ruling regarding the sale of XRP tokens. The judge determined that the sale of XRP tokens valued at $728.9 million to institutional buyers would be classified as unregistered securities offerings. However, it's important to note that this ruling does not extend to sales of XRP to the general public.
The U.S. Securities and Exchange Commission (SEC) initiated the case against Ripple Labs in late 2020. The primary objective was to ascertain whether Ripple's XRP token should be categorized as a commodity or a security.
To be specific, the SEC filed a lawsuit against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen in December 2020, accusing them of selling unregistered securities. At the core of the legal debate lay the 1946 'Howey Test,' commonly used in the U.S. to determine investment contracts and securities. However, many cryptocurrency traders argue that 20th-century standards should not be applied to 21st-century digital assets.
According to the court filing, "XRP, as a digital token, does not inherently meet the Howey requirements of an investment contract, such as a 'contract, transaction or scheme.'"
The SEC versus Ripple case was marked by numerous delays and extensive requests for information from both parties. Simultaneously, thousands of XRP owners initiated their own legal actions.
The protracted legal battle negatively impacted the value and accessibility of XRP. Various trading exchanges delisted the asset, and owners faced difficulties in accessing their XRP holdings. However, the recent ruling brought joy to traders as the value of XRP skyrocketed by over 65% in a single day, reaching approximately $0.7873 per coin. As a result, XRP became the fourth largest cryptocurrency by market capitalization on Friday.
Originally designed to facilitate seamless financial transactions across different currencies, XRP aimed to eliminate the time and cost associated with foreign currency exchange fees. Nonetheless, being a cryptocurrency, XRP's value was susceptible to fluctuations, and many individuals purchased crypto assets with the intention of holding them for potential profits.
