What to Take Away
- A federal ruling from 2023 that stated that XRP tokens were not securities subject to securities laws was appealed by the Securities and Exchange Commission (SEC).
- XRP, the digital asset owned by Ripple Labs, lost as much as 11% of its value on Thursday before recovering some of that loss.
The SEC’s appeal is likely to delay Bitwise’s Wednesday application to the SEC for an XRP exchange-traded fund (ETF).
Following the Securities and Exchange Commission’s (SEC) decision to appeal a federal court ruling that found XRP (XRPUSD) is not a security when algorithmically sold to retail investors via exchanges, the price of the XRP token fell by as much as 11% on Thursday.1 XRP has since recovered some of those losses and was trading about 3% lower at 52 cents in recent trading.
U.S. District Judge Analisa Torres stated in the July 2023 order that the XRP token itself is not a security, which was viewed as a partial victory for Ripple Labs, the developer of XRP, and the broader crypto industry. However, the court did consider institutional XRP sales to be securities offerings that were not registered.
SEC Push vs. Ripple is back.
Even though the court only ordered Ripple to pay a penalty of $125 million, the SEC’s renewed campaign against Ripple continues after it initially demanded $2 billion in damages.
In response to the SEC’s court filing, Ripple Chief Legal Officer Stuart Alderoty wrote on the social media platform X late Wednesday, “The SEC’s decision to appeal is disappointing, but not surprising.”2 This legal development occurred just hours after crypto asset manager Bitwise filed to offer for the first spot XRP ETF Wednesday. The SEC’s appeal probably makes it less likely that the proposed spot XRP ETF will be approved soon.
