XRP fate hangs in balance after SEC vs LBRY judge fails to rule on LBC token status
- The final ruling in the SEC vs LBRY case is in.
- Presiding Judge Barbadoro refused to clarify whether LBC token is a security.
- The Judge exercised judicial restraint, differing from January’s hearing where Deaton had persuaded the judge that secondary market sales did not involve securities.
- XRP holders await Judge Analisa Torres' ruling in the SEC vs Ripple lawsuit amidst the conservative outcome in the SEC vs LBRY case.
Paul Barbadoro, the presiding Judge in the SEC vs LBRY case, took a completely different stance on the status of LBC token being or not a security than the one he had taken in the January ruling. Back then, it had been clarified that the judge’s order does not apply to secondary market sales of the LBC token. In the final ruling on July 11, Judge Barbadoro decided to exercise judicial restraint and refused to comment on the status of the LBC token as a security or non-security in secondary market transactions.
The SEC vs Ripple lawsuit has a similar situation where XRP holders are awaiting the judge’s clarification on secondary market sales of the token. XRP token’s fate therefore hangs in the balance until Judge Analisa Torres releases the verdict.
SEC vs LBRY ruling is out, XRP holders are disappointed
The community of XRP holders have closely watched the SEC vs LBRY case for two reasons. Pro XRP attorney John Deaton’s involvement as amicus in both cases generated interest and hope in the Ripple community, awaiting a ruling on the status of the LBC token, as a “non-security.”
The second key reason is XRP holders expect Judge Analisa Torres to comment on the status of secondary market sales of the altcoin and rule whether XRP is a security in these transactions. This directly affects XRP holders as they have engaged in purchase/ sell of the altcoin on cryptocurrency exchange platforms.
FXStreet has covered the SEC vs LBRY case in detail here.
What’s next for the XRP community
Attorney John Deaton, an amicus curiae or friend of the court in both the SEC vs LBRY and SEC vs Ripple lawsuits, claims that the development is troubling and shared his thoughts in a recent tweet:
I asked the Judge to clarify that the token itself is not the security just as Judge Castel did in Telegram. He declined to do so because he said that specific issue wasn’t litigated and he believes in exercising judicial restraint. He wrote: “it suffices to say that merely… https://t.co/xR9AemS5Hq
— John E Deaton (@JohnEDeaton1) July 11, 2023
Deaton has assured XRP holders that in the final ruling by Judge Torres he will ask the judge for clarification on the secondary market sales of the altcoin XRP. However, the recent verdict in SEC vs LBRY has made it more likely that Judge Torres could refuses to rule on the status of XRP as a security, citing it as an issue that was not litigated.
SEC vs Ripple lawsuit FAQs
Why are the US Securities and Exchange Commission and Ripple litigating?
The United States Securities and Exchange Commission (SEC) brought charges against Ripple and its executives alleging that the cross-border payment settlement firm raised more than $1.3 billion through an unregistered asset offering of the XRP token. Ripple argues that XRP should not be treated as a security or an investment contract, just like the SEC looks at Bitcoin or Ethereum, citing views from former SEC Director of Corporation Finance William Hinman.
When did the SEC vs. Ripple court case start?
The SEC charges were made public in December 2020. The long-running litigation, presided by Judge Analisa Torres, seems to be close to its end as both parties fail to reach an agreement.
What are the effects on XRP price?
Ripple is the largest holder of the altcoin XRP. The SEC’s charges against Ripple resulted in a mass delisting of XRP across crypto exchange platforms and a sharp decline in the token’s value, which used to be the third crypto asset by market capitalization after Bitcoin and Ethereum. A positive outcome for Ripple in its case against the SEC would benefit XRP’s price, while a SEC win is likely to weigh further on the asset, experts say.
Which implications could the ruling have on the overall crypto industry?
The final verdict in the SEC vs. Ripple lawsuit is the most highly anticipated in the crypto ecosystem. The lawsuit is expected to set precedent for other open cases that affect dozens of digital assets. A ruling in favor of the SEC would most likely bring further regulation to the sector as it would classify most tokens as securities. On the contrary, Ripple’s win would be interpreted as a validation of the crypto markets and could boost investors' confidence if current legal uncertainties surrounding digital assets in the US are solved.
What about secondary sales of XRP among traders?
The ruling may also include views over XRP secondary sales, which directly affects investors who trade XRP on cryptocurrency exchange platforms. Pro-Ripple attorney John Deaton, who filed an amicus brief in the SEC vs. Ripple case, suggests this matter is likely to be addressed. A ruling stating that secondary sales don't qualify as securities, contrary to what the SEC claims, is likely to be beneficial for XRP.
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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
