XRP did win the part of their lawsuit which pertained to programmatic sales on public exchanges, but they lost when it came to institutional sales.
Ripple Labs only won one part of the lawsuit started against them by the United States Securities and Exchange Commission (SEC). But even this partial victory should be enough to influence all future lawsuits brought against crypto-currencies like XRP.
Did XRP win the lawsuit?
The case that the SEC started against Ripple Labs Inc. (the creators of the XRP token) and its current and former chief executives has been one of the most closely-watched cases in the history of crypto-currency and has actually had quite a surprising outcome.
The answer to whether Ripple Labs won the lawsuit is convoluted. Judge Analisa Torres ruled on 13 July 2023 that the programmatic sales of XRP on digital asset exchanges did not violate federal securities laws.
Judge Torres justified this ruling by explaining that the XRP tokens could not be considered securities, as there was no reasonable expectation of profit tied to their sales.
However, this only scored Ripple Labs (and by extension, XRP) a partial victory, because Judge Torres also found that the sale of XRP to institutional investors violated federal securities laws, which gave the SEC its own, partial victory.
Ultimately, the case ended up being pretty 50-50, but because so few crypto-currency cases ever make it to trial, this ruling is bound to have far-reaching implications.
Why did XRP sales to institutions violate federal securities laws?
While XRP exchanges on public trading platforms may not have had any expectation of profit, the court found that in cases in which XRP was sold to sophisticated buyers (which amounted to about $728.9 million in total), a speculative proposition of value was made.
This value proposition meant that these institutional sales, in particular, qualified as unregistered sales of securities.
What this will mean for future SEC crypto-currency lawsuits
It may seem strange that the crypto-world has been buzzing so much about a case that only delivered a partial victory in terms of the XRP currency.
But since most cases that have made it to court in the past have classified this type of digital asset as a security under an investment contract, there is absolutely no doubt that other crypto-currencies will use this case to set a new precedent in future cases.
What happened to XRP after this ruling?
Although Ripple Labs did not score a complete victory over the SEC, the value of XRP tokens started increasing (up to 75 percent) almost immediately after the news broke that they had scored a partial victory.
Several crypto exchange platforms like Coinbase (COIN.O) and Gemini (Gemini.com) have also announced plans to re-list XRP.