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Key Takeaways
- The Securities and Exchange Commission (SEC) appealed a 2023 federal ruling that stated the that XRP tokens were not a security that fell under securities laws.
- Ripple Labs’ digital asset, XRP, lost as much as 11% of its value Thursday before giving up some of those losses.
- This appeal by the SEC is likely to hamper crypto asset manager Bitwise’s Wednesday filing with the SEC for an XRP exchange-traded fund (ETF).
The price of the XRP token fell by as much as 11% Thursday following the Securities and Exchange Commission’s (SEC) decision to appeal a federal court ruling last year that found XRP (XRPUSD) is not a security when algorithmically sold to retail investors via exchanges. XRP has since given up some of those losses and was trading roughly 3% lower at 52 cents in recent trading.
This ruling had been seen as a partial victory for XRP’s developer, Ripple Labs, and the broader crypto industry, with U.S. District Judge Analisa Torres stating in the July 2023 order that the XRP token itself is not a security. However, the the court did view institutional XRP sales as unregistered securities offerings.
Renewed SEC Push vs Ripple
The SEC’s renewed push against Ripple continues after it initially sought $2 billion in damages in the case, although the court ordered Ripple to pay only a $125 million penalty.
“The SEC‘s decision to appeal is disappointing, but not surprising,” Ripple Chief Legal Officer Stuart Alderoty posted late Wednesday on the social media platform X in response to the SEC’s court filing.
This legal development came just hours after crypto asset manager Bitwise filed to offer for the first spot XRP ETF Wednesday. The SEC’s appeal likely weakens the potential for the proposed spot XRP ETF to be approved anytime soon.