Cryptos soar after Ripple's partial victory against the SEC
There´s a revolution in the cryptocurrency market. Bitcoin (BTC) rebounds 3% to $31,300, while Ethereum (ETH) rises 7% and climbs to $2,000. The market's market capitalization has soared 6.2% in the past 24 hours to $1.26 trillion, with Bitcoin setting new yearly highs at $31,814. The culprit? Ripple (XRP).
Ripple Labs scored a partial victory against the Securities and Exchange Commission (SEC) in the two institutions' contentious 2020 dispute yesterday, on Thursday. As ruled by the District Court for the Southern District of New York, the sale of the XRP token on exchanges and through algorithms did not constitute an investment contract as defended by the US regulator.
The news boosted Ripple strongly, as the token rose 96% at one point to change hands at 93.6 cents, its highest level since March 2022, before Terra's implosion. The rises following the ruling have enabled XRP to overtake Binance coin (BNB) and set itself up as the fourth largest cryptocurrency on the market: Ripple currently has a market capitalization of over $41.4 billion, while Binance's native token is more than $900 million below that.
It should be noted that, after hearing the news, major crypto exchanges such as Coinbase, Crypto.com, Bitstamp or Kraken have announced that they will return to trading XRP on their platform, while others such as Gemini have indicated that they are studying doing so.
Similarly, other'altcoins singled out by the SEC in different lawsuits such as Cardano (ADA) or Solana (SOL) have soared 25% and 30%, respectively, in the last 24 hours.
"The ruling in the Ripple case is important as it specifically renders secondary market trading of utility tokens outside SEC jurisdiction, while preserving their jurisdiction over institutional fundraising.This is very good news for crypto exchanges and investors regarding a wide range of tokens identified by the SEC in the Coinbase and Binance lawsuits," stated Dave Weisberger, co-founder and CEO of cryptocurrency algorithmic trading platform CoinRoutes.
However, the court does believe that the institutional sale of XRP violated federal securities laws and therefore the token could be defined as a security.
"The Court has found Ripple to be in violation of securities laws, specifically in relation to direct sales to institutional investors. As such, XRP is not only deemed a security, but questions have arisen regarding the legality of its offering. In regards to these sales, the Court has confirmed that the law was indeed violated, marking a considerable victory for the Securities and Exchange Commission (SEC) and setting a precedent for its legal actions against other cryptocurrencies," commented Townsend Lansing, head of product at CoinShares.
Similarly, Lansing believes "it is important to note that institutional investors who purchased directly from Ripple may find themselves subject to class-action litigation as potential underwriters. This is an area to watch closely, especially if big-name venture capitalists were involved."
Nonetheless, the impressive rally in XRP in particular and the cryptocurrency market as a whole seems evidence that investors have not yet fully digested this part of the ruling... or are ignoring it altogether.
In other market news, the bulls stand out, unsurprisingly. Dogecoin (DOGE) has risen 8%, while Polygon (MATIC) has soared 17%.