By
Chimamanda U. Martha
April 26th, 2024
According to the ruling, Ripple violated securities law when it sold XRP to institutional investors. However, the “programmatic sales” of XRP through exchanges and algorithms are not considered as the sale of securities.
Coinbase Inc (NASDAQ: COIN) will resume trading XRP coin – native currency of the US-based company Ripple Labs Inc – following the ruling of a US federal court. Over the past few years, Ripple Labs has been under scrutiny as the US Securities and Exchange Commission (SEC) accused the company of illegally raising $1.3 billion through the sale of XRP. There have also been disputes whether XRP token is an unregistered security. On Thursday, Analisa Torres – US district judge of the US District Court for the Southern District of New York – ruled that Ripple Labs Inc did not violate federal securities law by selling its XRP token on public exchanges.
The SEC and Ripple saga started back in 2020, when SEC sued Ripple for the first time, accusing the firm of violating securities laws in one of the first major legal fights involving cryptos. According to SEC, Ripple has been raising funds through the sale of XRP in an unregistered securities offering.
The ruling by Analisa Torres has been a win-win order. According to the ruling, Ripple violated securities law when it sold XRP to institutional investors. The company first sold around $728.9 million worth of XRP directly to institutional buyers, hedge funds and other parties, all of them purchased XRP with the expectation that they would profit from Ripple’s work.
However, the “programmatic sales” of XRP through exchanges and algorithms are not considered as the sale of securities because the SEC cannot definitively say speculative investors had “a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others”.
Thus, the ruling has been a partial winning for the SEC. It is also the first time ever the court made a ruling in favor of the crypto sector. Stuart Alderoty, Ripple’s chief legal officer, called the ruling “a win for the broader crypto industry”.
XRP Trading Back to Exchanges
Following the news, Coinbase announced its decision to relist XRP.
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
Coinbase further added:
“Trading is anticipated to begin later today, if liquidity conditions are met. Once sufficient supply of this asset is established trading on our XRP-USD, XRP-USDT and XRP-EUR trading pairs will launch in phases. Support for XRP may be restricted in some supported jurisdictions.”
As a result of the immediate response to the ruling, Coinbase saw its stock soaring. Coinbase closed the trading session with its stock 24.49% up, at $107.00 per share. It was the first time over the period of one year Coinbase stock broke the $100 mark. In the prolonged trade, COIN shares added another 2.24%. Coinbase’s market cap reached $20.17 billion.
Notably, Gemini exchange said it was exploring relisting XRP.
Given today's ruling that the sale of XRP on exchanges is not a security, @Gemini is exploring the listing of XRP for both spot and derivatives trading.
— Gemini (@Gemini) July 13, 2023
Meanwhile, following the ruling, XRP’s price rocketed by as much as 80%. As of the press moment, XRP is trading at $0.7945.