Ripple’s XRP token is poised for a potential resurgence as the long-running SEC case may soon reach a resolution, with sources indicating that Ripple’s legal team is pushing to renegotiate terms of a pivotal 2023 ruling.
The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) could soon reach a resolution, according to a report by Fox Business.
The Ripple vs. SEC case revolves around the regulatory status of XRP, a cryptocurrency issued by Ripple Labs.
In December 2020, the US 'Securities and Exchange Commission' (SEC) sued Ripple for allegedly selling unregistered securities.
The suit claims that XRP was sold as an investment contract, making it a security rather than a commodity.
Ripple argues that XRP is a currency, not a security.
The case highlights the need for clear regulatory guidelines on digital assets.
The case, which has dragged on since December 2020 when the SEC accused Ripple of raising over $1.3 billion through unregistered sales of its closely related XRP token, may finally be wrapping up — though not without last-minute wrangling over its terms. Sources told Fox that Ripple’s legal team is pushing to renegotiate aspects of a pivotal 2023 ruling by District Judge Analisa Torres of the Southern District of New York (SDNY).
The Securities and Exchange Commission (SEC) has been scrutinizing the status of XRP, a cryptocurrency issued by Ripple Labs.
In December 2020, the SEC filed a complaint against Ripple, alleging that XRP is a security and thus subject to securities laws.
The case revolves around whether XRP's sale constitutes an investment contract, a key factor in determining its classification as a security.
In 2023, Judge Torres ordered Ripple to pay a $125 million penalty for its institutional XRP sales, which the court deemed unregistered securities offerings while sparing the company the nearly $2 billion fine the SEC had demanded. This decision was widely considered to be a win for Ripple at the time it was issued, as the court determined that its programmatic sales of XRP to exchanges for purchase by retail traders did not constitute securities transactions.
However, with the SEC and its new leadership now in a full-scale retreat from many of its investigations into crypto companies, and having agreed to drop ongoing enforcement suits against companies like Coinbase, Cumberland DRW, and Kraken, Ripple’s partial victory may not taste quite as sweet. XRP climbed 3% on the news.
The Securities and Exchange Commission (SEC) regulates digital tokens as securities under the Howey Test, which determines whether an investment is a security.
The SEC requires issuers of digital assets to register with them and comply with disclosure requirements.
In 2020, the SEC approved the first Bitcoin ETF, allowing investors to buy and sell Bitcoin through traditional stock exchanges.
A representative for Ripple did not respond to CoinDesk’s request for comment by press time.
