Ripple and SEC: The U.S. Court of Appeals for the Second Circuit took a major step toward regulating crypto businesses by ruling in the Coinbase case that secondary market transactions in cryptocurrencies are not securities. The federal judge's ruling in SEC v. Ripple Labs is an important precedent that prevents the US SEC from filing an appeal regarding XRP secondary market sales.
Former SEC employee john reed stark Judge Feira said he considered and completely rejected Judge Torres' reasoning in the Ripple decision that secondary sales cannot constitute investment contracts, which he said was a major blow to Coinbase and Ripple. However, a new ruling in the Coinbase case makes secondary market sales much clearer.
Selling virtual currency on the secondary market is not a security
Coinbase Chief Legal Officer (CLO) Paul Grewal Coinbase has received major clarification from the 2nd Circuit Court of Appeals in Manhattan, New York City. Notably, it is in the same court building as the Ripple vs. SEC case.
“What is clear under federal securities law is that there is no personal liability for secondary trading of digital assets on exchanges like Coinbase,” said Paul Grewal..He added that the court agreed that there was no investment agreement between Coinbase and the secondary sale of tokens as alleged by the plaintiffs.
Plaintiffs are charged under Sections 5, 12(a)(1), and 15 of the Securities Act of 1933, as well as Sections 5, 15(a)(1), 20(a), and 29(b). and asserted federal claims. In addition, we have brought state law claims under the securities laws of California, Florida, and New Jersey.
The court found that Coinbase had no ownership interest in the tokens purchased by the plaintiffs and was not a legal seller subject to liability under the Pinter lawsuit. Coinbase won a major lawsuit against plaintiffs because when people buy and sell digital currencies on the Coinbase exchange, they are not buying or selling to Coinbase.
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A big win for Ripple and the cryptocurrency industry
Judge Torres “While institutional buyers knowingly purchased XRP directly from Ripple pursuant to a contract, the economic reality is that programmatic buyers did not know who or what they were paying money for, and secondary market buyers “We are in the same position,” the court ruled. ”
Accordingly, Judge Torres did not make a conclusive finding regarding the nature of secondary market sales of XRP, stating that the issue has not been adequately addressed by the court. The judge ruled that programmatic sales of XRP are not securities because they do not meet the Howey Test.
After Judge Failla says trading of crypto assets in the secondary market is not expressly excluded from being a component of investment contracts, XRP Army fears SEC may appeal secondary sales after ruling did.
However, the Second Circuit's latest decision sets a strong precedent against such appeals by the US SEC.
XRP price today
XRP price rose nearly 2.5% on the back of fresh benefits from the Ripple vs. SEC lawsuit. At the time of writing, the price was $0.5947, an increase of 2.2% compared to the same point the previous day. However, 24-hour trading volume fell 40% to $937.7 million. Currently, XRP's market capitalization is $32.7 billion.
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