new york
CNN
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The cryptocurrency industry took a decisive step in its battle with regulators on Thursday, with a judge ruling that Ripple Labs did not violate federal securities laws by offering its XRP tokens to public exchanges. Although it was a victory, it undermined an important debate by the Securities and Exchange Commission.
The news sent the price of XRP, a token designed for cross-border payments, up about 70% to about 92 cents.
The opinion by Judge Annalisa Torres of the Southern District of New York, which said that XRP is “not necessarily a security on its face,” partly supports the cryptocurrency industry's argument that the digital asset should not be regulated as a security. Justified. The SEC, under Chairman Gary Gensler, has aggressively argued otherwise.
Torres' ruling was partially in favor of the SEC because it found that some of Ripple's sales (to hedge funds and other sophisticated buyers) violated securities laws.
Still, Ripple's chief legal officer Stuart Alderroti called it a “huge victory.”
“As a matter of law, XRP is not a security…Maybe we can start a rational conversation about crypto regulation in this country,” he tweeted.
An SEC spokesperson said the agency is satisfied with the court's finding that supports the argument that some XRP transactions are illegal. A spokesperson said, “We will continue to review the decision.''
Under Mr. Gensler, financial watchdogs have taken an openly hostile stance toward the crypto industry. Gensler said that most crypto tokens, with the exception of Bitcoin, are securities under the jurisdiction of the SEC. Recently, the SEC has been pursuing major crypto industry companies such as Binance and Coinbase for operating illegal exchanges in the United States.
Teresa Goody Guillen, a former attorney in the SEC's Office of General Counsel and now a partner at BakerHostetler, said Thursday's ruling comes after a three-year legal battle and sets precedent in other crypto cases. He said it would be.
“This is an important opinion that has the potential to change the landscape of SEC enforcement activity,” she said in an email, adding that the lawsuit is based on the SEC’s allegation that Coinbase and Binance operate as unregistered securities exchanges. Brokers and clearinghouses, it added, can help protect against claims.
Some of the Ripple cases remain unresolved and are expected to proceed to court. Torres ruled that it would be up to a jury to determine whether Ripple executives aided and abetted illegal sales to institutional investors.
Despite the nuances of Torres' ruling, crypto investors are hailing it as a long-awaited victory.
There hasn't been much positive news in the digital asset space over the past year, as a series of once-powerful companies and entrepreneurs have stumbled. Most notably, FTX and its former CEO Sam Bankman Fried.
On Thursday, news of Ripple's legal victory was largely overshadowed by the arrest of Alex Mashinsky, the former CEO of Celsior, another cryptocurrency giant that went bankrupt last year. . Mashinsky has pleaded not guilty to wire fraud and other crimes stemming from allegations that he inflated the price of Celsius' native tokens and misled customers.
Meanwhile, on Friday, the Wall Street Journal reported that Binance, the world's largest cryptocurrency exchange, is in the process of laying off 1,000 people, about a third of its global workforce. . A Binance spokesperson declined to comment specifically on the report, but acknowledged that the company is reviewing its resource allocation and focusing on “talent density across the organization.”
“Dark clouds have been hanging over the crypto industry ever since the SEC went after Coinbase and Binance,” said Antoni Trenchev, co-founder and managing partner of crypto financier Nexo. “This ruling, while subtle, brings some much-needed sunshine and cheer to the altcoin space, i.e. non-Bitcoin tokens.”
