A federal judge’s ruling that selling Ripple’s XRP tokens through exchanges and algorithms did not violate securities laws sparked a surge in crypto markets and related stocks.
Bitcoin (BTC) broke the $31,000 mark to reach $31,700, its highest level in over a year, according to CoinDesk data. Blockchain native tokens like Solana (SOL), Polygon (MATIC) and Cardano (ADA), previously labeled as unregistered securities by the Securities and Exchange Commission (SEC), rose about 15 percent.
Since May 2022, XRP has not traded at the $0.60 level due to a decline in the crypto industry. However, after the recent news, XRP surged approximately 70 percent to $0.80.
“We said in Dec. 2020 that we were on the right side of the law and will be on the right side of history,” Ripple Labs CEO Brad Garlinghouse said on social media on Thursday.
“Thankful to everyone who helped us get to today’s decision—one that is for all crypto innovation in the U.S. More to come.”
Coinbase, which trades on Nasdaq, soared 24 percent, reaching its highest level since August 2022, while business intelligence company MicroStrategy gained 12 percent. Crypto mining companies also saw significant increases overall. Marathon Digital and Riot Platforms each rose by 14 percent, while Hut 8 Mining had a larger increase of 19 percent.
Following the ruling, Coinbase announced plans to reinstate trading for XRP-USD, XRP-USDT and XRP-EUR trading pairs on the XRP network as soon as enough liquidity is available.
Coinbase will re-enable trading for XRP (XRP) on the XRP network. Do not send this asset over other networks or your funds may be lost. Transfers for this asset remain available on @Coinbase & @CoinbaseExch in the regions where trading is supported.
— Coinbase Assets 🛡️ (@CoinbaseAssets) July 13, 2023
SEC’s lawsuit against Ripple
In December 2020, the SEC filed a lawsuit against Ripple, alleging that the company’s sales of $1.3 billion worth of XRP since 2013 constituted an unregistered securities offering.
In March 2021, Chris Larsen and Garlinghouse, co-founders of Ripple Labs, sent letters to the U.S. District Court Southern District of New York Magistrate. They argued that the SEC lacked fair notice regarding classifying XRP as a security.
In response to the letters, the SEC requested an immediate hearing. It was unclear what the outcome of this request was or whether a hearing was scheduled.
Later in March 2021, judge Sarah Netburn made a statement that distinguished XRP from other cryptocurrencies, such as BTC and ETH. She noted that XRP had currency value and utility, which set it apart from purely speculative assets.
In April 2021, Hester M. Peirce, a Commissioner at the SEC, unveiled the Token Safe Harbor Proposal 2.0 to grant developers three years of leniency to comprehend their involvement in decentralized networks and assess whether they qualify for exemptions from securities laws.
In June 2021, the Ripple vs. SEC court extended the SEC’s deadline for disclosing its internal crypto trading policies to August 31, 2021. In October 2021, a deadline for gathering opinions from experts in cryptography and securities was set.
On January 24, 2022, judge Netburn granted the SEC until February 17 to appeal her earlier decision, which required Ripple to provide the SEC with some sensitive government documents related to the case.
In September 2022, the SEC and Ripple argued for summary judgment on whether Ripple Labs violated federal law in selling XRP. On September 29, 2022, judge Analisa Torres ruled to release emails written by former SEC corporation finance division director William Hinman.
The emails were related to a speech in which Hinman said that ETH was not a security because it was sufficiently decentralized. On December 2, 2022, the SEC and Ripple filed redacted final arguments for the suit.
Ripple chief legal officer Stuart Alderoty said on February 20, 2023, that he expected his company would ultimately prevail against the SEC’s allegation that XRP is a security.