Ripple XRP lawsuit outcome
The Ripple lawsuit is a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Ripple Labs and its co-founders. The SEC alleges that Ripple Labs violated securities laws by selling XRP, an unregistered security. Ripple Labs counters that XRP is a digital currency and not a security. The lawsuit began in December 2020 and was decided in July 2023. The ruling was assessed in favor of Ripple Labs. The main points of the ruling are as follows:
- The XRP sold by Ripple Labs to institutional investors is a security : The court acknowledged the SEC’s argument and determined that Ripple Labs entered into an investment contract when selling XRP to institutional investors. This was an activity that required registration under the Securities Act.
- XRP sold to the public through a cryptocurrency exchange is not a security : The court acknowledged Ripple Labs’ argument and ruled that XRP sold to the public through a cryptocurrency exchange was not a security. It was explained that it is traded in a decentralized structure and is not influenced by Ripple Labs.
- Recognize the validity of the Howey Test : The court recognized the validity of the Howey Test as a standard for determining whether a security is a security. The escort test is a method of examining whether the investment object is expected to generate profits in the form of investment funds in a joint venture and relies on the efforts of a third party.
Outlook after Ripple XRP lawsuit
The Ripple lawsuit had a significant impact on the cryptocurrency ecosystem, and the price of Ripple soared 30% following reports of the lawsuit’s conclusion. Ripple’s CEO said he plans to consider an IPO after the lawsuit is resolved, and the Ripple community and industry experts welcomed Ripple’s victory. However, the SEC announced its intention to appeal, and secondary market sales remain controversial.
Why did the SEC file an appeal?
- SEC’s intention to appeal : The SEC announced its intention to appeal against Ripple Labs, filing a lawsuit against Terraform Labs and CEO Kwon Do-hyung. The SEC claimed that the judge handling the Ripple case created an artificial gap between the expectations of institutional and retail investors in XRP.
- SEC’s Grounds for Appeal : The SEC argued that the SEC’s ruling that XRP sales to individual investors did not constitute securities sales should be overruled. The SEC argued that if this distinction were made, the Howie test would be completely overturned.
- Reaction from Ripple and its supporters : Ripple and its supporters criticized the SEC’s intention to appeal. Attorney John Deaton, who supports the Ripple community, argued that even if the SEC appeals, the impact on XRP holders will be minimal, and Ripple Chief Legal Officer Stuart Alderotti criticized the SEC for exercising political power in accordance with its power.
What impact will the SEC’s appeal have on Ripple?
It is not yet clear what impact the SEC’s appeal will have on Ripple. Some see the SEC’s appeal as a threat that could overturn Ripple’s victory, while others predict that the SEC’s appeal will not have much of an impact on Ripple.
Positive impact of SEC’s appeal on Ripple:
Here are the positive impacts of the SEC’s appeal on Ripple:
- Could Increase Ripple’s Market Share : While the SEC’s appeal leaves uncertainty about whether Ripple is a security, it could strengthen Ripple’s competitiveness. Ripple already has partnerships with a number of financial institutions and offers international remittance services through XRP. If the SEC’s appeal does not hinder Ripple’s innovation and growth, it could secure a unique position in the market.
- Ripple’s legal status could be clarified : The SEC’s appeal could lead to a final ruling on Ripple’s legal status. If the SEC loses its appeal, Ripple could definitively prove that XRP is not a security. This can give Ripple legal stability and credibility.
Negative impact of SEC appeal on Ripple
The negative impact of the SEC’s appeal on Ripple is as follows:
- Could Decrease Ripple’s Market Value : The SEC’s appeal could have a negative impact on Ripple’s market value. The SEC’s appeal may reduce investor confidence and interest in Ripple, which could adversely affect the price of XRP. Additionally, the SEC’s appeal could trigger a move by cryptocurrency exchanges to suspend or restrict XRP trading. This may reduce the liquidity and accessibility of XRP.
- Could Increase Ripple’s Legal Costs : The SEC’s appeal could increase Ripple’s legal costs. If the lawsuit is prolonged due to the SEC’s appeal, Ripple will have to pay attorney fees and court costs. This may put a strain on Ripple’s financial condition and business activities.