fter a lengthy legal battle, blockchain company Ripple has claimed victory against the Securities and Exchange Commission (SEC), which said it likely will not appeal the recent court ruling.
On August 7th, the SEC broke its silence regarding District Judge Analisa Torres’ decision, which ordered Ripple to pay a $100 million penalty for violating investor-protection laws. The penalty is substantially less than the $1.3 billion originally sought by the SEC.
In a statement, the SEC expressed satisfaction that the court recognized the "egregiousness" of Ripple's conduct. However, the agency did not indicate plans to appeal, a revelation that prompted celebration across the crypto industry.
Ripple CEO Brad Garlinghouse called it a "good day for crypto and a good day for Ripple." He said the outcome brings clarity on how to determine whether a digital asset is a security.
No Allegations of Fraud
Unlike most SEC battles, the regulator never accused Ripple executives of fraud or illegal personal enrichment. The core issue was whether XRP transactions constituted "investment contracts" and therefore securities.
Judge Torres ruled the sales to institutional buyers did violate securities laws, while coin sales on public exchanges did not. The judgment reinforced the "Howey Test," which says investment contracts exist when purchasers invest money in a common enterprise with an expectation of profit solely from others' efforts.
The SEC argued that Ripple promoted XRP as a speculative investment, while Ripple contended the coin is a currency to facilitate global payments.
Uncertainty Lifted
Many in the industry hope the conclusion of the Ripple case will lift regulatory uncertainty that has stifled innovation. Entrepreneurs and investors have struggled to navigate ambiguities around which tokens constitute unregistered securities.
Wednesday's ruling provided more clarity, though areas of confusion still exist. In the meantime, the outcome allows Ripple to leave the legal fight in the past and focus on advancing its global payments network.
