In an unprecedented turn of events, crypto firm Ripple Labs celebrated a partial victory against the U.S. Securities and Exchange Commission (SEC) following an interesting court ruling that began to shape the regulatory environment for the cryptocurrency industry. The judge, presiding over U.S. District Court for the Southern District of New York, dictated that Ripple’s exchange of XRP tokens, including through algorithms, cannot be branded as investment contracts. Yet, she found that sales of XRP to institutions didn’t comply with federal securities laws.
Once the news broke, XRP experienced a remarkable surge, climbing up to 80%. Cryptocurrency exchanges such as Coinbase and Gemini emitted signals that they might consider listing or re-listing the controversial token. This victory should not be mistaken for a hearty stamp of approval. Legal experts are treading lightly, highlighting that this ruling fails to address the broader question of when a digital asset is defined as a security under U.S. law.
Echoes of this decision reverberated in the financial community, and Ripple’s XRP surpassed Binance’s BNB token, becoming the fourth-largest digital asset based on market cap. Currently valued at $41.44 billion, it dwarfed BNB’s market cap of $40.57 billion. As Ripple supporters toast to this development, a cautionary note still rings – Ripple was indeed found in violation of securities laws in terms of institutional direct sales.
In other news, Alex Mashinsky, former CEO of collapsed crypto lender Celsius, faced the full force of the law. Arrested in New York post an investigation into the company’s downfall, Mashinsky is confronted with seven criminal charges, including securities fraud and commodities fraud. A trio of separate lawsuits by the SEC, Commodity Futures Trading Commission (CFTC), and Federal Trade Commission (FTC) further complicates his predicament.
Finally, in a ripple effect of Thursday’s court ruling, the Grayscale Ethereum Trust (ETHE) experienced a shift in fortune. Trading at 37.52% lower than the net asset value, the discount is the narrowest it has been since mid-November 2022. This turn of events points to enhanced investor interest in alternative cryptocurrencies, coupled with an undermining of the SEC’s crypto regulation momentum, all thanks to Thursday’s court ruling.
Source: Coindesk
