By Jody Godoy | Reuters
Ripple Labs Inc did not violate federal securities law by selling its XRP token on public exchanges, a U.S. judge ruled on Thursday, a landmark legal victory for the cryptocurrency industry that sent the value of XRP soaring.
XRP was up 75% by late afternoon on Thursday, according to Refinitiv Eikon data.
The ruling by U.S. District Judge Analisa Torres was the first win for a cryptocurrency company in a case brought by the U.S. Securities and Exchange Commission — though it did also give the SEC a partial victory.
While the decision is specific to the facts of the case, it likely will provide ammunition for other crypto firms battling the SEC over whether their products fall under the regulator’s jurisdiction.
An SEC spokesperson said the agency was pleased with part of the ruling in which the judge held that Ripple violated federal securities law by selling XRP directly to sophisticated investors.
It is possible for the ruling to be appealed once a final judgment is issued, or if the judge allows it before then.
The SEC spokesperson said the regulator was reviewing the decision.
Ripple Chief Executive Brad Garlinghouse in an interview called the ruling “a huge win for Ripple but more importantly for the industry overall in the U.S.”
Coinbase (COIN.O), the largest U.S. crypto exchange, said it would again allow trading of XRP on its platform.
“We’ve read Judge Torres’ thoughtful decision. We’ve carefully reviewed our analysis. It’s time to relist,” Coinbase chief legal officer Paul Grewal said on Twitter.
“Many people think that when companies issue tokens to raise funds, those tokens are considered securities. But this decision has temporarily put a pause on that belief. Both sides are probably going to appeal, but for now, those who want to get into token offerings can breathe a sigh of relief. The court has ruled that selling tokens on a digital asset exchange through blind bid/ask transactions doesn’t count as securities.” – Shruti Gurudanti, Rose Law Group partner and director of corporate transactions
