XRP Skyrockets to Become Fourth Largest Cryptocurrency, Market Cap Soars by Over $20 Billion
Ripple’s native cryptocurrency, XRP, experienced a significant surge in market capitalization following Ripple Labs’ partial victory over the U.S. Securities and Exchange Commission (SEC) on July 13. Within hours of the ruling, XRP’s market cap skyrocketed by $20 billion, propelling it to become the fourth largest cryptocurrency by market capitalization, surpassing Circle’s USD Coin (USD) and Binance’s BNB token.
At the time of writing, Ripple’s market capitalization has settled at $40 billion, marking a new yearly high. The sudden surge in XRP’s value was triggered by the District Court for the Southern District of New York’s declaration that the “offer and sale of XRP on digital asset exchanges did not amount to offers and sales of investment contracts” in the ongoing case involving Ripple Labs and the SEC. Following the court’s decision, XRP’s price surged by as much as 98%, reaching a high of $0.93 according to TradingView data.
While the ruling does not absolve the company and its executives from potential enforcement repercussions, legal experts view the programmatic buyer part of the ruling as a victory for both Ripple and the broader crypto industry. According to Stephen Palley, partner and co-chair of the digital commerce group at law firm Brown Rudnick, “The logical conclusion is that secondary sales of XRP are not securities transactions.” This interpretation could have far-reaching implications for the secondary market of digital assets, bolstering industry arguments in other ongoing proceedings, such as the SEC’s case against Coinbase.
Gary DeWaal, senior counsel at law firm Katten, emphasized the significance of the ruling, stating, “This is a major victory for the industry and a major loss for the SEC because, in fact, by holding that the programmatic sales are not investment contracts, she is holding that secondary market transactions in crypto assets are not securities.” The ruling’s implications may extend beyond Ripple’s case, potentially affecting the outcome of other lawsuits, such as those involving Coinbase and Binance.
Teresa Goody Guillén, a partner at law firm BakerHostetler, echoed the sentiment, highlighting the rarity of obtaining a ruling that recognizes certain digital asset transactions as not falling under securities laws. She mentioned, “So far, digital asset issuers have not battled in court this far and obtained a ruling that in some circumstances the transaction involving a digital asset is not a security.” Guillén suggested that this ruling could have repercussions in cases involving Coinbase and Binance, indicating that the judge’s reasoning, particularly regarding blind bids, played a crucial role.
Nevertheless, it’s important to note that the court’s order is not binding, and other judges within the same district court may have differing opinions. Additionally, the ruling can still be appealed to the Second Circuit Court of Appeals, a likely scenario predicted by multiple experts. The appeal could potentially precede a trial to determine the liability of Ripple’s CEO Brad Garlinghouse and co-founder Chris Larsen for unlawful securities sales.
Jaret Seiberg, Managing Director at TD Cowen, characterized the ruling as a “wake-up call” for the SEC, suggesting that its legal authority may not be as clear-cut as previously believed. However, Seiberg cautioned that appeals courts often overturn decisions made by trial court judges, emphasizing that the outcome of the appeal is far from certain.
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