A portion of the recent XRP in unregistered securities offers will still proceed to trial, according to the federal judge presiding over the dispute between the Securities and Exchange Commission and the cryptocurrency company Ripple. She made this announcement on Thursday. The SEC intends to challenge Torres’ ruling holding that institutional sales of XRP—or sales to investors like venture capital firms—are permissible securities offerings but secondary sales of the cryptocurrency are not.
Legal experts stated that the judge’s ruling was a setback for the federal agency, which is currently engaged in a broader campaign of crypto sector repression following the failure of the now-bankrupt exchange FTX.
An inquiry for comment was not immediately answered by a Ripple spokeswoman. A spokesman for the SEC declined to comment.
The newest ruling by Torres in the SEC’s lawsuit against Ripple is a precedent-setting case that may have an impact on how cryptocurrency is used in the United States in the future.
The SEC filed a lawsuit against Ripple, the main creator of the cryptocurrency XRP, in December 2020. The agency’s accusations were focused on XRP being an unregistered security or being comparable to stock in a public firm. On the other hand, Ripple claimed that it was a commodity, or something more equivalent to gold or sugar.
The matter has been making its way through court for more than two years. In the meantime, the SEC has stepped up its legal action against cryptocurrency companies, filing landmark lawsuits against some of the biggest names in the sector, including Binance and Coinbase, based on the same legal theory that supports its case against Ripple—that the vast majority of cryptocurrencies are securities.
But Torres eventually issued a summary judgement in the case in July. The CEO of Ripple, Brad Garlinghouse, stated on Twitter that the decision “directly undercuts the SEC’s claims that nearly all tokens are inherently securities—likely to set a positive precedent for other digital tokens in the U.S.”
However, the SEC has said that its protracted legal dispute with Ripple won’t be resolved any time soon because of its intention to appeal.
