XRP Community Reacts to SEC Setback in Kraken Lawsuit

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As a seasoned analyst with over two decades of experience in the financial sector, I must say that the recent Kraken lawsuit verdict has left a profound impact on my perspective towards cryptocurrencies and their regulatory landscape. Having closely observed the SEC’s ongoing efforts to assert control over digital assets, it is refreshing to see a court ruling that not only aligns with the industry’s stance but also provides much-needed clarity.

As a crypto investor, I’m excited about the recent development in the Kraken lawsuit. According to Marco Santori, Kraken’s Chief Legal Officer, the Securities and Exchange Commission (SEC) has lost their argument that all cryptocurrency tokens are securities. This means they can no longer use this theory in future cases, significantly weakening their ability to classify crypto tokens as securities. It’s a significant victory for the crypto industry!

The SEC’s argument that tokens are considered securities has been rejected, which means they can no longer use this claim in future cases. Instead, they will have to demonstrate for each transaction on Kraken that the Howey Test conditions are met. However, these conditions won’t be fulfilled, and we eagerly anticipate…

— Marco Santori (@msantoriESQ) August 23, 2024

In November 2023, the Securities and Exchange Commission (SEC) accused Kraken of running an unlicensed securities exchange, brokerage firm, dealing platform, and clearing house. Kraken sought to have the SEC’s case against them dismissed.

Kraken, similar to Ripple, argued that the Securities and Exchange Commission (SEC) lacked jurisdiction over digital assets. In a recent ruling on Kraken’s attempt to dismiss the SEC’s allegation, the court followed suit with the decision in the Ripple case: A token itself might not be considered a security, but contracts or agreements concerning a token could potentially be.

In the SEC vs Kraken case decided today, the ruling once again supports Judge Torres’ argument from the SEC vs Ripple case that the digital token in question does not qualify as a security.

— bill morgan (@Belisarius2020) August 24, 2024

The legal statement regarding XRP attracted notice from the XRP community. Bill Morgan, a crypto attorney and ardent XRP supporter, expressed his opinion in a post on XRP that the verdict in the Kraken lawsuit further supports Judge Torres’ reasoning in the SEC vs. Ripple case, implying that the token itself is not classified as a security.

Ripple ruling hailed as major victory for industry

The Ripple ruling, which declared that XRP could be subject to securities law only during sales to institutional investors, was widely celebrated as a major triumph within the industry.

Earlier this month, Ripple was ordered to pay a fine of $125 million as part of a civil case concerning sales made to institutional investors. This penalty is significantly less than the nearly $2 billion in fines that the Securities and Exchange Commission (SEC) had initially sought.

According to Gary Gensler’s perspective, many digital tokens fall under the category of unregulated securities, making them liable for oversight by the Securities and Exchange Commission (SEC). Gensler has been vocal about his criticism towards cryptocurrency trading platforms and the broader digital asset market, citing perceived violations of compliance.

Despite the court not dismissing Kraken’s case with the SEC, Kraken’s Chief Legal Officer, Marco Santori, celebrated the latest verdict as a substantial victory. In a tweet, Santori expressed that the federal court in the Northern District of California officially declared, based on law, that none of the tokens traded on Kraken are considered securities. This decision is seen as a major triumph for Kraken, for the concept of clarity, and for crypto users worldwide.

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2024-08-24 18:53