Ripple CEO Rejoices Landmark Court Ruling, New Development For XRP

Key Points:

• Ripple CEO Brad Garlinghouse declares victory as federal court determines XRP is not a security.
• The court ruling differentiates between sales to institutional investors and the general public.
• XRP’s market cap surges, making it the fourth-largest digital asset globally.

Ripple Labs, the company behind the cryptocurrency XRP, received a major boost as Chief Executive Officer Brad Garlinghouse announced that a federal court ruling declared XRP “is not a security.”

The decision provides Ripple with increased flexibility to explore various business opportunities and promote a wide range of use cases for its technology. Speaking with Bloomberg, Garlinghouse expressed relief that he no longer has to worry about the regulatory implications of promoting Ripple and its services. He highlighted that 95% of Ripple’s customers are located outside the United States, underscoring the significance of this ruling for the company’s global operations.

The court ruling, delivered by US District Judge Analisa Torres in New York, classified XRP as a security when sold to institutional investors but not when sold to the general public. This decision was seen as a victory for the crypto industry, as it challenged the US Securities and Exchange Commission’s (SEC) claim that XRP was an unregistered security. The SEC filed a lawsuit against Ripple in late 2020, accusing the company and its executives of misleading investors through the sale of unregistered securities.

Judge Torres’ ruling distinguished between sales to institutional investors, which met the criteria for an investment contract under federal securities law, and sales to the general public, which did not. The rationale behind this distinction was that retail buyers often had limited knowledge about where their money was going and how it would be used, unlike sophisticated institutional investors. However, it remains uncertain whether this dual approach to the classification of XRP will hold up in possible appeals or influence similar legal battles in the future.

While the SEC is expected to appeal the ruling, Garlinghouse noted that the appeals process could take years to conclude. The agency expressed its satisfaction with the court’s finding that XRP tokens were offered and sold as investment contracts in violation of securities laws. However, it also stated that it would continue to review the decision.

In response to the court ruling, XRP experienced a significant surge in price, and its market capitalization exceeded $41.2 billion, making it the world’s fourth-largest digital asset by market cap. The decision also prompted discussions among cryptocurrency exchanges, with Coinbase and Gemini considering listing or re-listing XRP. Nevertheless, experts caution that investors should not overlook the fact that the court ruling still deemed the institutional sale of XRP as a violation of federal securities laws, indicating that regulatory clarity for XRP remains a complex issue.

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