Ripple's XRP Just Got Some Very Bad News
Ripple's XRP Just Got Some Very Bad News
Ripple's XRP Just Got Some Very Bad News
Longtime FIN readers will recall that perhaps the largest foundational legal dispute around cryptocurrency is whether or not most cryptocurrencies amount to securities as defined by US law, and are therefore subject to the jurisdiction of the Securities and Exchange Commission (SEC). For years, individual regulators have publicly stated that they believe that most cryptocurrencies—but, crucially, not Bitcoin—are securities, and thus should be registered with the SEC, even though the overwhelming majority are not. Current SEC chair Gary Gensler was very clear on this point in a September address.
The big test case for this was filed in December 2020, in which the SEC went after Ripple Labs, charging that its coin XRP, which at one time was one of the largest cryptocurrencies out there, is a security and thus in need of registration. The suit is ongoing and supposedly should be resolved soon. Ripple has vociferously denied the government’s contention, and positioned itself as fighting on behalf of the entire crypto industry.
We’ve discussed in the past the reasons why the SEC is likely to prevail, and that argument was bolstered on Monday by a federal judge in a different case. In March 2021, the SEC charged a New Hampshire-based blockchain company called LBRY with selling digital assets that the agency said were securities that need to be registered. On Monday, federal judge Paul Barbadoro granted the SEC summary judgement in the case, definitively coming down on the side that LBRY’s offerings are, in fact, securities. LBRY and XRP are not exactly the same type of asset, but we are not alone in making the connection; look at what happened to XRP’s price in the last 24 hours:
It’s of course true that judges contradict one another all the time, but the SEC victory here is clear. We’ll know soon enough how the SEC case against Ripple/XRP comes out, but this ruling is a very strong booster to the government’s position.