XRP Faces Legal Setback as Recent Win Gets Challenged
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XRP, the native cryptocurrency of the Ripple network, experienced a sharp and unexpected decline in value this week following a pivotal ruling by a federal judge in New York. The ruling dealt a significant blow to Ripple and XRP enthusiasts, causing widespread concern and speculation in the cryptocurrency community.
Newsflash: Ripple Decision Already in (Big) Trouble
SDNY District Judge Jed Rakoff today allowed the SEC to go forward with its case against Terraform Labs and founder Do Kwon. In doing so, Judge Rakoff specifically rejected the distinction made in the Ripple case between public… pic.twitter.com/JZZ8vukfFt
— John Reed Stark (@JohnReedStark) July 31, 2023
In the legal battle against the U.S. Securities and Exchange Commission (SEC), Judge Jed Rakoff rejected a motion to dismiss the SEC’s case against Terraform Labs and its founder, Do Kwon. The SEC had accused the company of selling unregistered securities in the form of Terra’s tokens. This decision came in stark contrast to the previous ruling by Judge Analisa Torres, who had asserted that XRP was not a security when traded on secondary markets.
The disparity in the judges’ rulings led to a surge of uncertainty within the cryptocurrency market. Judge Rakoff’s stance questioned the distinction between public and institutional sales of digital assets, asserting the SEC’s authority to regulate them under the Howey test, a legal standard determining whether an investment contract is a security.
XRP Dips Following News
The news reverberated across the crypto community, causing an immediate downturn in XRP’s price. The coin, which had been trading at approximately $0.72 before the ruling, plummeted to as low as $0.67 on Tuesday. While the cryptocurrency has since shown some signs of recovery, it remains down by more than 2% in the past 24 hours.
Moreover, the implications of the SEC’s lawsuit have extended beyond the price decline, affecting XRP’s adoption and liquidity. Numerous exchanges and platforms have taken cautious measures in response to the legal dispute, leading to the suspension or delisting of XRP from their offerings.
Ripple, the company behind XRP, has passionately vowed to fight the charges against them and to demonstrate that XRP is not a security but rather a valuable and transformative technology that facilitates seamless cross-border payments. This determination has resonated with the XRP community, which remains hopeful that Ripple’s efforts will yield positive outcomes in the ongoing legal proceedings.
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