In December 2020, the United States Securities and Exchange Commission (SEC) sued Ripple Labs and its founders. On October 2, 2024, the SEC filed a notice of appeal regarding a ruling by Judge Analisa Torres. This article highlights the key developments in this legal saga.
SEC notice of appeal. Source: James K. Filan.
SEC's Appeal of Ripple Lawsuit
The SEC announced its intention to challenge a 2023 ruling by Judge Torres, which stated that secondary sales of Ripple's cryptocurrency, XRP, do not qualify as securities sales. This ruling was significant, indicating that XRP does not meet the criteria outlined in the SEC's Howey test for classifying financial assets as investment contracts.
Key Points from Judge Torres' Ruling
Judge Torres ruled that XRP is not a security. This was a pivotal moment for Ripple Labs and the cryptocurrency industry, allowing secondary sales of XRP to continue without being classified as unregistered securities. However, the judge noted that initial sales by Ripple's founders to institutional investors were considered securities sales due to their nature.
Leadership Changes at the SEC
Coinciding with the SEC’s appeal, the agency announced that its enforcement chief, Gubir Grewal, would step down on October 11. Grewal faced criticism for implementing strict enforcement actions against the cryptocurrency sector, suggesting over 100 actions during his tenure.
Source: SEC
While a permanent replacement for Grewal has not been named, Sanjay Wadhwa, the deputy director of the SEC's enforcement division, will serve as the interim chief enforcement director.
Institutional Interest in XRP Grows
Amid these developments, there are signs of increasing institutional interest in XRP. Bitwise, a prominent investment firm, recently filed for an XRP exchange-traded fund (ETF) trust in Delaware on September 30. However, this initial filing is not with the SEC and could face delays in approval due to the ongoing legal appeal.
Bitwise’s filing. Source: Delaware’s Department of State
The SEC's appeal in the Ripple lawsuit marks a significant moment in the relationship between regulators and the cryptocurrency industry. As legal battles continue, the future of XRP and similar digital assets remains uncertain, but institutional interest appears to be growing.
For those interested in the potential future of XRP, be sure to check out our Ripple Price Prediction article for detailed insights and analyses. Stay informed about this evolving situation!
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