{"id":12212,"date":"2024-08-08T17:05:48","date_gmt":"2024-08-08T17:05:48","guid":{"rendered":"https:\/\/topat10.com\/?p=12212"},"modified":"2024-08-08T17:05:48","modified_gmt":"2024-08-08T17:05:48","slug":"xrp-soars-as-judge-rejects-sec-call-for-2-billion-fine-on-ripple","status":"publish","type":"post","link":"https:\/\/topat10.com\/?p=12212","title":{"rendered":"XRP soars as judge rejects SEC call for $2 billion fine on Ripple"},"content":{"rendered":"\n

The cryptocurrency XRP<\/a> has climbed 23% after a federal judge dealt its issuer, Ripple Labs Inc.<\/a>, a softer blow than investors had feared. On Wednesday, the court announced that the blockchain payments firm must pay a civil penalty of $125 million for improperly selling its token to institutional investors. The penalty is just 6% of the $2 billion the Securities and Exchange Commission had hoped for.<\/p>\n

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\u201cThis is a victory for Ripple, the industry and the rule of law. The SEC\u2019s headwinds against the whole of the XRP community are gone,\u201d Ripple\u2019s CEO Brad Garlinghouse\u00a0tweeted<\/a> Wednesday.<\/p>\n

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The SEC asked for $2B, and the Court reduced their demand by ~94% recognizing that they had overplayed their hand. We respect the Court\u2019s decision and have clarity to continue growing our company.<\/p>\n

This is a victory for Ripple, the industry and the rule of law. The SEC\u2019s\u2026<\/p>\n

\u2014 Brad Garlinghouse (@bgarlinghouse) August 7, 2024<\/a><\/p><\/blockquote>\n

\ufffc<\/p>\n

XRP is trading at $0.62<\/a> as of Thursday morning, EST. However, the rebound isn\u2019t yet enough to recoup the long-term losses of the seventh-largest token. XRP remains down 2% year-to-date, a far cry from the wider market\u2019s trajectory this year, as Bitcoin and Ethereum remain up 33% and 46%, respectively.\u00a0\u00a0<\/p>\n

\u2018A blow to the SEC\u2019<\/h2>\n

The SEC sued Ripple in 2020<\/a>, alleging it broke the law by selling the token without registering it as a security. The regulator had sought more than $876 million in disgorgement (where a party is required to hand over its profits from illegal acts) and more than $198 million in interest, in addition to a $876 million civil penalty. Ripple strongly disputed the SEC\u2019s $2 billion claim, contending it shouldn\u2019t have to pay more than $10 million.<\/p>\n

U.S. District Judge Analisa Torres ruled that the case \u201cdoes not involve allegations of fraud, misappropriation or other more culpable conduct.\u201d Torres stated that the SEC had been unable to show that Ripple\u2019s failure to register the sales of XRP with the regulator, had caused investors significant losses. Torres denied its request for more than $1 billion in disgorgement. Instead, the court based the penalty on a per-violation calculation method. This resulted in a $125 million penalty, rather than a fine based on Ripple\u2019s profits from the relevant sales.<\/p>\n

\u201cIt\u2019s hard to view this as anything other than a blow to the SEC given it only got about 6% of the money it sought. At a minimum, this will hurt the agency\u2019s settlement negotiating leverage in similar cases,\u201d Elliott Stein, senior litigation analyst at Bloomberg Intelligence, told Fortune<\/em>.\u00a0<\/p>\n

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A final judgment. The Court rejects the SEC\u2019s suggestion that Ripple acted recklessly and she reminds the SEC that this case did not involve any allegations of fraud or intentional wrongdoing, and no one suffered any financial harm. She rejects the SEC\u2019s absurd demand for $2B in\u2026 https:\/\/t.co\/RbwpBnoXJG<\/a><\/p>\n

\u2014 Stuart Alderoty (@s_alderoty) August 7, 2024<\/a><\/p><\/blockquote>\n

<\/p>\n

The Howey Test<\/h2>\n

The crypto world had closely followed the case, regarding it as a key test of the SEC\u2019s authority over the industry. In the absence of laws that define what cryptocurrencies are, their legal status has been a topic of debate in courtrooms across the country, and sometimes resulted in inconsistent conclusions. <\/p>\n

The most pressing legal issues has been whether a given token is a security subject to the SEC\u2019s oversight, or a commodity.\u00a0In July, Judge Torres ruled<\/a> that XRP was<\/em> a security when sold to institutional investors, but is a commodity<\/em> when sold to retail investors via exchanges.<\/p>\n

The outcome of the securities versus commodities debates has turned on the application of the so-called Howey Test\u2014the Supreme Court\u2019s 1946 framework to determine if a transaction qualifies as an investment contract under securities regulation. While Torres applied the test in her analysis, it may require a subsequent Supreme Court ruling or an act of Congress to provide full clarity on how the test should be applied to digital assets.<\/p>\n<\/div>\n

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