Judge Rules Ripple is Only Partially a Security, XRP Surges 93%

July 13th, a judge from the Southern District of New York made a summary judgment in the case brought by the U.S. Securities and Exchange Commission (SEC) against Ripple (XRP) regarding its status as a security. 

The judgment is as follows:

"Ripple's institutional sales of XRP constituted unregistered securities offering and sales, in violation of Section 5 of the Securities Act."

"Ripple's programmatic sales of XRP, other distributions, and sales by Larsen and Garlinghouse do not constitute investment contracts and sales."

What does this judgment result actually mean? In response to this, Congressman Tom Emmer explained, "The institutional sales of XRP did constitute unregistered securities sales, but it was also ruled that the programmatic sales on the secondary market did not constitute unregistered securities sales. As for the XRP, it does not represent the 'contract, transaction, or scheme' required by the Howey test for an investment contract."

Simply put, the legality of XRP depends on the form of sales. Institutional sales were deemed illegal, while programmatic sales on the secondary market were not. Therefore, the final judgment is that it is partially illegal.

After the judgment was announced, every major global cryptocurrency exchange, including Coinbase, Gemini, Crypto.com, and others, has either relisted or started considering relisting XRP for trading.

Stimulated by the positive news, XRP experienced a major surge, skyrocketing from $0.48 to a high of $0.94, marking a significant increase of 93%. Currently, Ripple has retraced slightly and is trading at $0.74.

Hourly Chart Trend of XRP; Source: TradingView.

English translation: It is important to emphasize that this judgment result has far-reaching implications beyond just being positive for Ripple itself. Cryptocurrencies previously identified as securities by the U.S. Securities and Exchange Commission (SEC), such as Solana (SOL), Filecoin (FIL), Polygon (MATIC), Cardano (ADA), Stellar (XLM), and others, have experienced varying degrees of increase in value, thereby driving an overall rise in the cryptocurrency market!

24-hour Volatility of Top 13 Cryptocurrencies by Market Cap; Source: CoinMarketCap.

Will the upward trend continue? Generally, after positive policy news is announced, institutions or market-savvy participants tend to buy aggressively, driving up prices. However, some profit-takers may subsequently sell, leading to a price correction. During this time, as the news continues to circulate, it gradually attracts a second wave of buyers, further pushing the market higher.

As of the time of writing, we are still in the first phase, and the second phase has yet to arrive. Therefore, it is advisable to trade based on one's own situation. It is important to note that we are not currently in a bull market, and going all-in is never a wise choice.

Even more importantly, this judgment result is very clever as it takes into consideration both XRP and the SEC. From a broader perspective, Ripple represents the cryptocurrency market, while the U.S. Securities and Exchange Commission represents regulatory bodies. The proper resolution of this conflict contributes to the potential approval of Bitcoin spot ETFs and sets an example for resolving conflicts between cryptocurrencies and regulatory agencies in the future.