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The final judgment in the high-profile SEC v. Ripple case marks a significant milestone in crypto regulation. District Judge Analisa Torres‘s ruling on August 8, 2024, concluded a nearly four-year legal battle. This article delves into the case’s background, the final ruling, and its broader implications for the crypto industry.

Background of the SEC v. Ripple Case

The U.S. Securities and Exchange Commission (SEC) filed its lawsuit against Ripple Labs and its executives in December 2020. The SEC alleged that Ripple had raised over $1.3 billion through an unregistered securities offering by selling XRP, its native token. According to the SEC, XRP should be classified as a security under the Howey Test, which determines if a transaction qualifies as an investment contract.

Ripple, founded in 2012, has been a significant player in the blockchain and cryptocurrency space. Its primary focus is on facilitating cross-border payments using XRP. The lawsuit put Ripple’s operations under intense scrutiny and led to XRP being delisted from several major exchanges.

The Court’s Findings

In a series of rulings, Judge Torres made critical distinctions between different types of XRP sales. Her July 2023 decision marked a turning point in the case. Here are the key points:

1. Programmatic Sales: The court ruled that Ripple’s sales of XRP on public exchanges did not constitute securities transactions. These sales were considered blind bid/ask transactions, where buyers did not know they were purchasing from Ripple.
2. Institutional Sales: Ripple’s direct sales of XRP to institutional investors were found to be unregistered securities offerings. This resulted in a significant fine but not the crippling penalties the SEC initially sought.
3. Other Distributions: Distributions of XRP for employee compensation and other services were not considered investment contracts.

The Court’s decision today shows that the SEC’s overreach and absurdity was on full display – their last ditch effort to extort our company was off by 94%Ripple CEO Brad Garlinghouse

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