XRP soars 30% after judge rules for Ripple in SEC lawsuit

As of mid-day, the price of XRP was trading around 62 cents following the decision by U.S. District Judge Angela Torres. This represents an increase of 32% from the 47 cent level at which Ripple was trading prior to the ruling.

The ruling also sparked a modest rally in the broader crypto markets as major tokens like Bitcoin and Ethereum rose between one and four percent.

The ruling comes after the Securities and Exchange Commission sued Ripple and its top executives in late 2020, claiming that the company had sold millions of XRP tokens as unregistered securities. In response, the price of the token fell dramatically after exchanges like Coinbase delisted it from their platforms.

Ripple created 1 billion XRP around 2010 and still holds the bulk of those in reserve. But the company has long argued that the blockchain on which the XRP trade is decentralized—meaning that the company didn’t have sufficient control over XRP for the token to be a security.

In her decision, Judge Torres largely sided with Ripple. She found that, while Ripple’s sale of XRP to hedge funds and other sophisticated investors was a securities offering, this was not the case for the majority of its token sales.

Specifically, Torres found that, when Ripple sold XRP on exchanges, the buyers—who were mostly small traders—did not have a sufficient relationship with Ripple to create an investment contract.

“Therefore, the vast majority of individuals who purchased XRP from digital asset exchanges did
not invest their money in Ripple at all,” wrote Torres.

The ruling amounts to a major setback for the SEC, which is in the midst of a major enforcement campaign against the crypto industry, and whose Chairman has taken the position that all cryptocurrencies except for Bitcoin are securities.

The agency has yet to respond to the ruling, or say if it will file an appeal.