In a significant victory for the cryptocurrency industry, a US judge has determined that Ripple's sale of the XRP token on public exchanges and through algorithms did not violate federal securities law.
However, the case brought by the SEC against Ripple had a mixed outcome, as the judge, Analisa Torres, ruled that the institutional sale of XRP did indeed breach federal securities law.
Despite this, the news had a remarkable impact on XRP's price, which surged by 75% late on Thursday. Ripple's CEO, Brad Garlinghouse, expressed his satisfaction, stating to Reuters that the ruling was a "huge win for Ripple and, more importantly, for the entire industry within the US."
Following the favorable ruling, cryptocurrency exchange Coinbase swiftly announced that it would reintroduce XRP to its platform, causing its own share price to surge by over 20%.
The SEC initially filed the lawsuit in 2020, targeting Ripple, Brad Garlinghouse, and co-founder Christian Larsen. The allegations claimed that they had conducted an unregistered and ongoing digital asset securities offering, raising over $1.3 billion.
The judge's decision was based on the fact that the "programmatic" sales, conducted through exchanges and algorithms, were not considered offers of securities under the law. This conclusion was reached because it could not be definitively established that buyers had a "reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others."