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Another win for Ripple labs and its co-founders.
In a recent lawsuit against the Securities and Exchange Commission, the SEC claimed that XRP’s development and distribution are conducted in centralized way by Ripple labs, thus it is a security and comes under the scope of the SEC. For reader’s information, the SEC doesn’t consider, bitcoin and Ethereum, (having a decentralized nature), so these don’t fall under securities. On this, experts say this win may determine the future of crypto regulation.
The SEC used the 70 year old Howey test to determine if a transaction/coin should be classified as an investment contract or not. Providing a quick recap in plain English, the SEC filed the lawsuit against Ripple, claiming XRP is sold as an unregistered security and argued XRP is a security and not a commodity or other type of asset as it was generated, distributed and sold by Ripple Labs, California. Further on this, if XRP is an investment contract thus a security if would then fall under US securities law.
Ripple Attorney Mr Mehta says: “The U.S. Supreme Court’s decision in SEC v. W.J. Howey Co. provides that an investment contract exists when there is “an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”
“The SEC has already indicated that Bitcoin and Ethereum are not securities due to their decentralized nature, which is a hallmark of blockchain applications”, Mr. Mehta continued. “Ripple, on the other hand, is viewed differently by the SEC, which has taken the position that the development and distribution of XRP was conducted by Ripple in a centralized way.”
The SEC argued that “if the Court permitted Movants to intervene, all other XRP holders, including a large class of XRP investors who has already sued Defendant Ripple Labs, Inc. (“Ripple”) for unregistered offers and sales of XRP securities, would likely seek to intervene, too. Intervention would thus create an “avalanche” of claims and “near-certainty of undue delay, complexity, and confusion”.
Judge Torres said, “My understanding about XRP is that not only does it have a currency value but it has a Utility and that utility distinguishes it from Bitcoin and Ether.” The statement admits to XRP’s utility and currency value.
The court decision was given out with the Judge rejecting the SEC’s claim entirely. Therefore, Ripple labs won the iconic lawsuit, setting a new precedence that will open up all crypto currencies to operate outside of the SEC. With Bitcoin and Ethereum being equal to Ripple and Ripple’s utility status being included by the court, all coins are now playing on a level field. This opens the future of digital, crypto currencies and tokens for investment and expansion in the United States and other parts of the world as never before.
The sky is the limit.
To know more about crypto currencies and how and where to invest follow
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