A New York Court Is About to Rule on the Future of Crypto (2024)
When the SEC charged Ripple and its executives, it declared that XRP met these criteria and that, by raising funds through the sale of XRP, the company was in violation of federal securities law.
Although Ripple is not itself the issuer of XRP, which sits atop the open source XRP Ledger, some of its executives were part of thegroup that developed the token. The firm had also received a donation of 80 billion XRP in the early 2010s (worth around $30 billion at present) to develop use cases—some of which it sold off.
Ripple is challenging the SEC’s analysis on two fronts: It is arguing that its sale of XRP does not qualify as an investment contract because no contracts were signed when the transactions took place, and separately, that XRP does not satisfy the prongs of the Howey test.
Stuart Alderoty, chief legal officer at Ripple, says the company is certain that XRP does not meet any of the Howey criteria, but that it is particularly confident that there is nocommon enterprise—a group undertaking that affects the fortunes of XRP investors—among XRP holders, only “common interest.”
However, the SEC has longsaid that the majority of cryptocurrencies are securities, because people invest with the goal of turning a profit and, although tokens sit atop decentralized blockchain networks, many projects are in practice sufficiently centralized to meet the definition of a common enterprise.
The SEC declined to comment for this article.
Speaking at aconference in September, SEC chair Gary Gensler called on crypto businesses to register with the agency. “Given that many crypto tokens are securities, it follows that many crypto intermediaries are transacting in securities and have to register with the SEC in some capacity,” he said.
However, US government bodies have disputed the SEC’s right to regulate crypto. In alawsuit filed on March 9 against crypto exchange KuCoin, New York Attorney General Letitia James alleged that ether (the cryptocurrency of the Ethereum network), among other crypto assets, should be treated as a security. But the Commodities and Future Trading Commission (CFTC), another US financial regulator,contends that ether is a commodity and should therefore come under its purview.
The SEC has been pushing the crypto industry hard over the past four months following theimplosion of crypto exchange FTX in November, which took hundreds of millions of dollars in customer funds down with it. Since then, the SEC has launched a series of quickfire actions against crypto businesses serving the US market.
As a seasoned legal expert specializing in cryptocurrency regulations and securities law, I bring a wealth of knowledge and experience to shed light on the intricacies of the SEC's case against Ripple. My expertise extends to the analysis of legal frameworks, such as the Howey test, and their application in the evolving landscape of digital assets.
In the case of Ripple, the SEC alleges that the company, along with some of its executives, violated federal securities law by raising funds through the sale of XRP. It is crucial to understand that Ripple, despite not being the issuer of XRP, has strong ties to its development, as some of its executives were involved in the token's creation. Additionally, the company received a substantial donation of 80 billion XRP in the early 2010s, emphasizing its close association with the cryptocurrency.
Ripple's defense against the SEC's charges revolves around two key arguments. Firstly, Ripple contends that the sale of XRP does not qualify as an investment contract since no formal contracts were signed during the transactions. Secondly, the company challenges the application of the Howey test, asserting that XRP does not meet its criteria. Stuart Alderoty, Ripple's chief legal officer, is particularly confident that there is no common enterprise among XRP holders, only a common interest.
The Howey test, a legal standard established by the Supreme Court, consists of criteria to determine whether a financial arrangement constitutes an investment contract. Ripple disputes the SEC's assertion that XRP satisfies the prongs of the Howey test, emphasizing the absence of a common enterprise among XRP holders.
The SEC, on the other hand, has a longstanding position that the majority of cryptocurrencies are securities. Gary Gensler, the SEC chair, reinforced this stance at a conference, urging crypto businesses to register with the agency. Gensler highlighted the profit-seeking nature of crypto investments and argued that many projects, despite being built on decentralized blockchain networks, exhibit sufficient centralization to meet the definition of a common enterprise.
It's worth noting that the regulatory landscape for cryptocurrencies is complex, with different government bodies holding varying perspectives. The lawsuit filed by the New York Attorney General against KuCoin, where ether is alleged to be a security, contrasts with the Commodity and Futures Trading Commission's view that ether is a commodity falling under its purview.
In conclusion, the SEC's intensified scrutiny of the crypto industry, especially after the FTX exchange implosion, has led to a series of regulatory actions. The outcome of the Ripple case will likely set a precedent for the classification of cryptocurrencies and the regulatory framework surrounding their issuance and sale in the United States.
March 27 (Reuters) - A federal judge in Manhattan on Wednesday said the U.S. Securities and Exchange Commission's lawsuit against Coinbase (COIN. O) , opens new tab can move forward, but dismissed one claim the regulator made against the largest U.S. cryptocurrency exchange.
If Ripple were to win their court case against the SEC, it could potentially lead to a significant increase in the value of XRP (Ripple's cryptocurrency).
On March 27, U.S. District Judge Katherine Polk Failla in Manhattan denied Coinbase's bid to dismiss a Securities and Exchange Commission lawsuit claiming it illegally facilitated the trading of tokens that should have been registered as securities.
In July 2023, Judge Analisa Torres ruled Ripple sold unregistered XRP securities to US institutional investors. Ripple will use US legal precedent to argue for a reduced penalty considering the lack of fraud. In contrast, the SEC wants a punitive penalty as a deterrent.
Many experts believe it's only a matter of time before bitcoin sets new all-time highs on its path to $100,000. The next potential catalyst for bitcoin's 2024 performance will be its halving event, expected in mid-April. Halving is intended to maintain the scarcity of bitcoin and support its price.
The case is one of many that may define how the crypto industry can operate in the U.S. If a judge rules that exchanges must be treated similarly to national securities exchanges, as the SEC seems to want, it would impose new restrictions and disclosure regulations on these trading platforms, as well as potentially ...
XRP hit $0.30 in the first week of 2023 and has since been in an steady upward trend. XRP broke out of a short-term downtrend at the start of February, bouncing off key support at $0.50. Provided Ripple wins its case against the SEC, our XRP forecast predicts a price of $4.50 by the end of 2025.
However, if Ripple loses all appeals, the SEC is likely to collect the $1.3 billion (the amount that the regulator alleges that Ripple earned from the unregistered securities sale) and offer XRP holders an option to sell their holdings.
While a Ripple victory may cause the SEC to back off its aggressive actions against the crypto industry, a victory by the SEC might open the floodgates for further crypto regulations in the US. The writer is a founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Coinbase notched a very minor win against the U.S. Securities and Exchange Commission on Wednesday, but the essence of the agency's case against the nation's largest cryptocurrency exchange will proceed.
If you've received a request to update Coinbase's bank account details, or your deposit has been returned, it's because the Coinbase bank account details you are using for deposits are out of date.
Coinbase Global Inc. (COIN) suffered a setback as a judge denied the company's motion to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) for violating securities laws. 1 The company's stock dropped as much as 4.8% on Wednesday but eventually gained some lost ground.
However, none of these lofty predictions have materialized so far, grounded by XRP's huge circulating supply of over 54 billion tokens. For the coin to reach $1,000, its market cap would need to be $54.5 trillion – dwarfing crypto's entire current valuation.
The first and most significant legal victory for Ripple was tremendous, even if it was partial: Judge Analisa Torres found that Ripple had not violated existing securities laws by selling XRP to exchanges and giving retail buyers a chance to invest, but it did break the law when selling tokens directly to institutional ...
The Securities and Exchange Commission issued crypto exchange Coinbase a Wells notice, warning the company that it identified potential violations of U.S. securities law. Coinbase shares fell nearly 12% in extended trading after the news broke on Wednesday, adding to an 8.16% drop during regular trading hours.
In Coinbase, the SEC alleged that Coinbase and its holding company committed securities violations by failing to register as an exchange, broker, and clearing agency in violation of Exchange Act Sections 5, 15(a), and 17A(b), while offering trading in 13 third-party tokens claimed by the SEC to be securities.
U.S. District Judge Katherine Polk Failla's ruling allows the SEC to move forward with its case that Coinbase operated as an unregistered intermediary of securities and engaged in the unregistered offer and sale of securities through its staking program, which lets investors earn interest on their crypto tokens.
The SEC first filed suit against Coinbase on June 6, 2023, alleging that Coinbase violated federal securities laws by operating as an unregistered exchange, broker, and clearing agency in connection with 13 specific crypto assets Coinbase offered on its platform.
Address: Suite 751 871 Lissette Throughway, West Kittie, NH 41603
Phone: +2366831109631
Job: Sales Producer
Hobby: Creative writing, Motor sports, Do it yourself, Skateboarding, Coffee roasting, Calligraphy, Stand-up comedy
Introduction: My name is Laurine Ryan, I am a adorable, fair, graceful, spotless, gorgeous, homely, cooperative person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
