XRP Falls as SEC Appeals Ruling on Token's Security Status
- SEC appeals federal court ruling stating XRP is not a security when sold to retail investors.
- XRP price dropped up to 11% following the SEC’s decision, later recovering some losses.
- The appeal may hinder Bitwise’s filing for a spot XRP ETF.
XRP, the digital asset developed by Ripple Labs, saw its price decline by as much as 11% on Thursday after the U.S. Securities and Exchange Commission (SEC) appealed a 2023 federal court ruling. The original ruling had determined that XRP is not a security when sold algorithmically to retail investors via exchanges.
Following the SEC’s appeal, XRP regained some ground and was trading about 3% lower at $0.52 in recent trading.
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Background on the 2023 Ruling
The 2023 ruling by U.S. District Judge Analisa Torres was viewed as a partial victory for Ripple Labs and the broader cryptocurrency industry. The judge stated that the XRP token itself is not a security. However, the court did find that institutional sales of XRP constituted unregistered securities offerings.
SEC's Renewed Legal Actions Against Ripple
The SEC’s appeal marks a continued effort to challenge Ripple. Initially, the SEC sought $2 billion in damages, but the court ordered Ripple to pay a reduced penalty of $125 million.
Stuart Alderoty, Ripple’s Chief Legal Officer, responded to the SEC’s decision on the social media platform X, saying, “The SEC’s decision to appeal is disappointing, but not surprising.”
Impact on Bitwise's XRP ETF Filing
This legal development comes shortly after crypto asset manager Bitwise filed to offer the first-ever spot XRP Exchange-Traded Fund (ETF) on Wednesday. The SEC’s appeal is likely to weaken the chances of the proposed spot XRP ETF being approved in the near future.
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