Ripple Labs, Inc and the U.S. Securities and Exchange Commission (SEC) have been in a prolonged battle since December 2020.
At the time, the SEC filed a lawsuit against the former on the premise that Ripple sold an unregistered security, XRP, equivalent to the federal securities laws.
Ripple was accused by the SEC of conducting an unregistered securities offering — not ICO — of XRP tokens amounting to $1.3 billion in 2013.
In the books of the SEC, XRP can be categorized as a security according to the "Howey test" — a legal test for determining whether a transaction falls under an investment contract. However, ripple claimed that XRP is not a security but a digital currency.
After three years, it has been rumored that this case will soon end.
At the midpoint of January, the CEO of Ripple, Brad Garlinghouse, told a news agency,
"We're optimistic that this will certainly be resolved in 2023, and maybe (in) the first half. But I feel good about where we are relative to the law."
His foresight may just be proven right.
Last week, XRP increased as investors and enthusiasts grew optimistic that Ripple would win the case against the SEC. It grew by 11% within 24 hours. In fact, data from Santimentfeed showed that about 420 million XRP, worth $155.4 million, was bought.
The president of Ripple, Monica Long, was also confident about their chances. "Considering our view, both the facts and the law are on our side," she said.
A potential success for Ripple would cause massive waves in the crypto space and could have long-lasting impacts.
Here are potential implications for the crypto industry:
For most people in the industry, uncertainty exists on what constitutes "security." Whatever ruling the court grants could improve clarity for other cryptos and further enhance the industry.
A win for Ripple is a direct win for XRP. Its value would increase, with a higher demand for it.
This debacle with the SEC hasn't been without its downsides for Ripple. The lawsuit demeaned its status. If it wins, it will restore its reputation as a leading blockchain developer.
Crypto thrives on sentiment, either positive or negative. If Ripple succeeds in the court, this would facilitate more crypto adoption and increase the belief of more investors in crypto.
A win for Ripple against the SEC in this lawsuit would signal significant positive changes in the crypto industry. Moreover, it would generally improve confidence in crypto and aid in its adoption. A bull run might be on the horizon.
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