Mayfair International Capital - The Ripple-SEC Court Ruling and Crypto Investors

The long-awaited decision finding in SEC v. Ripple Labs was released by the United States District Court for the Southern District of New York in early July.
KOWLOON, Hong Kong - Aug. 17, 2023 - PRLog -- They issued a split decision, granting and denying different aspects of each party's motions, and specifically determined that XRP, the primary digital token at issue in the case, "is not in and of itself a 'contract, transaction [,] or scheme' that embodies the Howey requirements of an investment contract."

This judgment is significant not just for the Ripple defendants, but also for the entire digital assets market, since the SEC has long held that all tokens (except bitcoin) are investment contract securities in and of themselves. The decision that XRP is not a "contract" and that it relies on the circumstances adds to the ambiguity.

Ripple CEO Brad Garlinghouse hailed Torres' decision "an unequivocal win for Ripple and crypto in the United States." Garlinghouse has criticized the SEC's efforts to be the principal regulator of digital assets. "The SEC created this mess by proclaiming it was the cop on the crypto beat when it had no legal jurisdiction," he said in a tweet. "We all know that legislation - not more regulation by enforcement - is the only way forward to provide clear rules and protect retail."

The cryptocurrency community, notably exchanges, applauded the decision, believing it would help provide greater regulatory certainty. One such exchange is Coinbase, which was sued by the SEC in June on claims of running an unregistered exchange and broker. The most recent Ripple-SEC court decision has given Coinbase confidence in its fight against the SEC.

"There's no doubt that this ruling strikes a blow to the idea that somehow securities are traded when people go onto exchanges and trade the assets for exchanges, for tokens that are listed on exchanges, for regular investors," Paul Grewal, chief legal officer of Coinbase, told CNBC. "I believe we will win. I felt we'd win before this decision. "We believe this decision has only strengthened the case," he continued.

The Securities and Exchange Commission (SEC) disagrees with the finding. The SEC addressed the Ripple Labs judgement and noted a number of problems it has against the court's recent decision on XRP in a filing against Terraform Labs and former Terra-Luna CEO, Do Kwon, a week after the ruling.

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