Ripple Labs scored a major win in its battle with the U.S. Securities and Exchange Commission (SEC), with XRP deemed as not a security when sold on digital asset exchanges. However, some lawyers argue an appeal is possible, and that it may not necessarily help in cases against Binance and Coinbase. Meanwhile, the former CEO of Celsius has been arrested and has reportedly been released on bail.
XRP ruling a ‘watershed moment’ but don’t celebrate yet
Ripple Labs’ split-decision victory against the United States securities regulator is being seen as a significant blow to the regulator’s “war on crypto,” however, crypto lawyers warn it isn’t a definitive victory for the industry.
The Ripple ruling today decimates the @SECGov’s case against @coinbase. Have fun with that one @GaryGensler. https://t.co/2lfFXxX2Xf
— Tyler Winklevoss (@tyler) July 13, 2023
The sentiment appears to come from a belief that the ruling will bode well for other altcoins deemed by the SEC as securities — meaning it could have a positive impact for Binance and Coinbase in their respective tussles with the SEC.
However, several digital asset lawyers warned against celebrating too soon.
Law firm partner Stephen Palley of Brown Rudnick noted that the summary judgement is only “partial” and that the ruling by Judge Torres does not set a precedent — instead, it may only serve as persuasive commentary for future courts to follow if they so choose.
A word of caution: that order in the Ripple case is a partial summary judgment from a single district court judge.
While persuasive, it’s not binding precedent on other courts and will likely be appealed and could be reversed
don’t yolo into anything based on that decision
— Palley (@stephendpalley) July 13, 2023
Palley and others noted that there’s also the chance the SEC may appeal the decision, which presents the possibility that a higher court overturns the rulings made by Judge Torres.
Judge deems XRP not a security in SEC lawsuit
Ripple Labs cleared a major hurdle on July 13 after a judge ruled in favor of the company in the case brought forward by the SEC.
Judge Analisa Torres of the U.S. District Court for the Southern District of New York agreed with Ripple Labs that roughly half of its $1.4 billion XRP (XRP) token sales didn’t constitute an illegal securities offering. Critically, the judge also determined that XRP is not a security.
“Defendants’ motion for summary judgment is GRANTED as to the Programmatic Sales, the Other Distributions, and Larsen’s and Garlinghouse’s sales, and DENIED as to the Institutional Sales,” court documents read.
PREDICTION now that the #Ripple summary judgment threw US #crypto regulation into further disarray:
Congress will finally act.
Federal financial regulators usually don’t open themselves to litigation that cld MASSIVELY cut back their jurisdiction grab. The SEC did. Next up…
— Caitlin Long ⚡️ (@CaitlinLong_) July 13, 2023
The value of XRP soared on the news, reaching an intraday high of nearly $0.89, according to CoinMarketCap. That’s the highest level in over two years.
Despite the apparent win, Ripple Labs isn’t completely out of the woods yet, as part of the SEC case is still headed to trial.
Former Celsius CEO Alex Mashinsky reportedly arrested
The former CEO of now-bankrupt crypto lender Celsius, Alex Mashinsky, was reportedly arrested on the morning of July 13. The news broke minutes after the SEC filed a lawsuit against the crypto lender on the same day.
The former CEO was arrested after a probe into the company’s collapse, reported Bloomberg citing people familiar with the matter. Mashinsky was reportedly charged with fraud and intention to manipulate the market.
Celsius filed for bankruptcy on July 14 last year. Mashinsky was recently found guilty by investigators of the Commodity Futures Trading Commission, which concluded that the former CEO broke numerous U.S. regulations before the company’s implosion in 2022.
The investigation against the former CEO began after the New York attorney general sued Mashinsky on Jan. 5. The NYAG alleged that the former CEO misled investors and caused billions of dollars in losses.
The trouble for Celsius and its former CEO began in June last year, when the crypto lender abruptly suspended withdrawals on the platform. On June 16, 2022, securities regulators from five different U.S. states opened an investigation into Celsius, and within a month, the platform filed for bankruptcy.
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