Congrats to Ripple owners after a district court rules its token is not a security. This is a major blow to the SEC’s regulation of crypto.
Ripple is up 31 cents, a 66 percent rise after trading up as much as 95 percent.
Bitcoin and Ethereum rose a modest 2.5 percent and 5.7 percent respectively.
GOP Majority Whip Tom Emmer Chimes In
Blow to the SEC
The Wall Street Journal reports Ripple Ruling Deals a Blow to SEC’s Effort to Regulate Crypto
U.S. District Judge Analisa Torres agreed with Ripple Labs’ argument that roughly half of its sales of XRP didn’t violate investor-protection laws. Ripple has argued that XRP, a token developed to facilitate cross-border payments, isn’t a security. The decision Thursday could buttress claims made by major cryptocurrency exchanges that are fighting similar SEC allegations over token trading.
“If other courts follow this reasoning, that is a major problem for the SEC,” said Marc Fagel, a former director of the SEC’s San Francisco office.
Torres also ruled partly for the SEC, finding that the other half of Ripple’s sales, or $728 million, did constitute an illegal sale of securities. The judge issued her decisions within an order that addressed Ripple’s and the SEC’s requests for summary judgment, a standard process that parties use to resolve a lawsuit before it goes to trial.
The SEC targeted sales that Ripple made directly to institutional investors and to others via digital-asset exchanges. Institutional investors that bought XRP knew the seller was Ripple. Those investors could infer that Ripple would boost the value of XRP and they relied on the company to make their tokens appreciate, Torres wrote. That made the transaction a securities offering, she concluded.
Ripple may face financial penalties over those sales, Fagel said.
But people who bought XRP on digital-asset exchanges didn’t know they were buying from Ripple since the seller isn’t disclosed, Torres wrote. That was enough for Torres to conclude the investors didn’t depend on Ripple’s efforts to drive the value of XRP—and therefore the sales weren’t securities offerings. She also dismissed the SEC’s claims related to $600 million in XRP that Garlinghouse and Larsen sold on exchanges.
“Whereas the institutional buyers reasonably expected that Ripple would use the capital it received from its sales to improve the XRP ecosystem and thereby increase the price of XRP,” the investors who used exchanges “could not reasonably expect the same,” she wrote.
Part of the case is headed for trial. I suspect Ripple will get off with a fine, possibly outside of court.
The way forward for Ripple is clear. Stick to exchanges. The same logically applies to similar crypto models.
This is a well-deserved blow to the SEC and a victory for common sense, a commodity that is in fact, not very common.
“…a token developed to facilitate cross-border payments..”
For drug cartels, oligarch’s laundering money, gun smugglers, human traffickers, sanctioned entities to get around SWIFT…?
Not to mention, Article I, Section 8, Clause 5: “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”
.
Should the good old US of A-issued sawbuck have a monopoly on illicit transactions?
“For drug cartels, oligarch’s laundering money, gun smugglers, human traffickers, sanctioned entities to get around SWIFT…?”
And Uighurs, activists stuck in totalitarian regimes, whistleblowers, LGBTs in mean regimes……
As well as anyone else being oppressed by some other totalitarian Junta, than the exact one which arbitrarily deems and finds and holds and judges and decides who their particular captive, pliable, gullible, not so bright indoctrinati, should reflexively call baaaaad, baaaad, baaaaaaad something-or-other traffickers and cartels; and who should equally uncritically be branded goooood, goood, goood “victims.”
As a general rule: Anyone even slightly above such captive, pliable, gullible, not so bright indoctrinati on the intellectual ladder; quickly and intuitively realise that it is indeed Freedom itself, which is the highest possible goal. ALL the rest, all yabuts, are nothing more than trite and illiterate justifications for one arbitrary tyranny or another. None of which differ, even in the slightest, wrt legitimacy.
https://www.thecryptoalert.com/post/bank-of-japan-to-use-xrp-to-facilitate-cross-border-payments
Are you insinuating all those unsavory characters are being effectively stymied in the current system?
You might as well advocate getting rid of personal vehicles in lieu of mass transit because a private car could be used to smuggle drugs or commit some other criminal activity.
If you’re going to quote the U.S. Constitution then read down to Section 10 where it describes what money is and note that it doesn’t say anything about zinc and nickel tokens.
I am 99% happy with the legal standard for crypto being “Buyer Beware.” One percent of me thinks there ought to be more acknowledgement by traders they are engaging in a psychological experiment that combines the games of “Hot Potato” and “Musical Chairs’.
Remember when the SEC sued coinbase and someone had supposedly made a fortune on $50 puts? Well those options finished out of the money and COIN is now trading at $107.
There are already some precedents around non-government entities creating new currencies. Liberty Dollar comes to mind.
https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency)
In May 2009, von NotHaus and others were charged with federal crimes in connection with the Liberty Dollar, and, on July 31, 2009, von NotHaus announced that he had closed the Liberty Dollar operation, pending resolution of the criminal charges.[4] On March 18, 2011, von NotHaus was pronounced guilty of “making coins resembling and similar to United States coins”. In late 2014, a U.S. District Court judge ruled that Liberty Dollars seized in the 2007 FBI/USSS operation should be returned to their owners.
Now if a “token” is a currency used for cross country payments, how is that different from “liberty dollars” or other currencies they are not authorized to create? Then there is the whole taxation issue around these tokens. It will get interesting.
Taxation’s easy… everything you need is in the ledger.
How do you collect when money (err…token) has gone overseas?
Same way as if they go there with cash.
Use the CIA.
The FBI is limited (sic) to US operations.
Working through ad layout issues, Apologies