Ripple could cross the line and violate securities law says judge, slaps firm with $125 million fine
|- SEC vs. Ripple lawsuit ends with Judge Torres ruling that Ripple is likely to violate the law with their willingness to push boundaries.
- Judge slammed Ripple with $125 million in fines for institutional sales of XRP, a federal securities law violation by the payments firm.
- XRP broke through $0.60 resistance, erasing recent losses, while Bitcoin and Ethereum struggled under key support on Thursday.
Ripple (XRP) led gains among top 10 cryptocurrencies on Thursday after a historic court ruling in the Securities & Exchange Commission (SEC) lawsuit. Judge Analisa Torres considered the likelihood of the payment remittance firm violating federal securities law in the future and hit Ripple with a $125 million penalty.
Daily Digest Market Movers: Ripple lawsuit ends, but SEC could appeal ruling
- Ripple lawsuit ended with Judge Analisa Torres asking the firm to pay $125 million in penalties for the likelihood that it eventually crosses the line by violating federal securities law in the future.
- As traders digested the news of the SEC vs. Ripple ruling, pro-crypto attorney Fred Rispoli explained that Judge Torres recognized the absence of litigation in her final ruling.
- In her ruling, Judge Torres says that “The Court finds that Ripple’s willingness to push the boundaries of the order evinces a likelihood that it will eventually, if it has not already crossed the line. On this balance the Court finds that there is a reasonable probability of future violations, meriting the issuance of an injunction."
- The ruling judge slammed Ripple with $125 million in fines, and predicted a “violation” is likely, if it hasn’t occurred already.
- Attorney Rispoli interprets this as Judge Torres telling the two parties, "You two better work out on your own whatever is happening now. I'll be pissed if you come back to me."
IMO this is a recognition that, absent legislation, any particular sales event is highly contextual as to whether it's a violation. It's almost as if Torres is saying, "You two better work out on your own whatever is happening now. I'll be pissed if you come back to me."
— Fred Rispoli (@freddyriz) August 8, 2024
IMO this is a recognition that, absent legislation, any particular sales event is highly contextual as to whether it's a violation. It's almost as if Torres is saying, "You two better work out on your own whatever is happening now. I'll be pissed if you come back to me."
— Fred Rispoli (@freddyriz) August 8, 2024
- SEC could appeal Judge Torres’ ruling in the lawsuit.
- XRP has received legal clarity in the final ruling. However, an appeal could change that and influence investor confidence and demand for the altcoin negatively.
Technical analysis: XRP could rally to $0.75, November 2023 peak
Ripple rallied above key resistance at $0.60 and trades at $0.62 at the time of writing. The altcoin could extend gains by over 19% and hit its November 2023 peak of $0.75 in its attempt to break out of the multi-month downtrend.
The XRP/USDT daily chart shows that the altcoin has attempted to break out of the downward trend. A daily candlestick close above $0.61 could validate the bullish thesis. Relative Strength Index (RSI) reads 60.42, well above the neutral level.
XRP faces resistance at $0.66, the 50% Fibonacci retracement of the decline from the July 13 top of $0.93 to the July 5 low of $0.38.
XRP/USDT daily chart
Ripple could find support at the Fair Value Gap (FVG) between $0.51 and $0.57, as seen in the XRP/USDT daily chart.
SEC vs Ripple lawsuit FAQs
It depends on the transaction, according to a court ruling released on July 14: For institutional investors or over-the-counter sales, XRP is a security. For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token. While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at. Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say. Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation. While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
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