July 13 (Reuters) – Ripple Labs violated federal securities law in its sales of the XRP cryptocurrency directly to sophisticated investors, but its sales on public exchanges did not include securities, a US judge said in a ruling.
XRP is up 25% after the ruling, according to data from Refinitiv Eikon.
The SEC had charged the company and its current and former executives with conducting a $1.3 billion unregistered securities offering through the sale of XRP, created by Ripple’s founders in 2012.
New York-based U.S. District Judge Annalisa Torres said Thursday that the company’s $728.9 million in XRP sales to hedge funds and other savvy buyers amounted to unregistered sales of securities.
But Torres ruled that sales of XRP on public cryptocurrency exchanges were not securities offerings under the law, because buyers did not have a reasonable expectation of profit associated with Ripple’s efforts.
These sales were “blind supply/ask transactions,” she said, as “buyers could not tell if their payment went to Ripple, or any other seller of XRP.”
Torres ruled that sales of XRP on cryptocurrency platforms by Ripple CEO Brad Garlinghouse and co-founder and former CEO Chris Larsen, and other distributions including compensation to employees did not include securities.
However, Torres said the jury should decide whether or not Garlinghouse and Larsen helped the company break the law.
Additional reporting by Tom Hales in Wilmington, Delaware. Editing by Chizu Nomiyama and Connor Humphreys
Our Standards: The Thomson Reuters Trust Principles.
[ad_2]