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XRP ruling a ‘watershed moment’ but we’re not out of the woods yet — Lawyers

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XRP ruling a ‘watershed moment’ but we’re not out of the woods yet — Lawyers

The crypto community has gathered to celebrate the recent ruling on XRP’s securities status, but lawyers warn there’s more to it than meets the eye.

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Ripple Labs’ split-decision victory against the United States securities regulator is being seen as a significant blow to the regulator’s “war on crypto,” however, crypto lawyers warn it isn’t a definitive victory for the industry.

In a landmark ruling on July 13, Judge Torres determined that XRP (XRP) is not a security — at least when sold to the general public.

The decision was met with a joyous uproar from XRP token holders and came with a massive surge in the token’s price, with industry heavyweights lauding the decision as likely to aid crypto exchanges Coinbase and Binance in their respective lawsuits.

Luke Martin, the founder of crypto investment firm Venture Coinist noted that the “core component” of the United States Securities and Exchange Commission’s (SEC) claim in its suits against Binance and Coinbase is that they offered the sale of unregistered securities on their platforms.

After losing on this matter in the case of XRP, Martin believes this will serve as a substantial blow to the SEC and its chair, Gary Gensler.

He called the decision “inconceivably bullish” for the industry:

Pro-XRP lawyer John Deaton shared a similar sentiment, stating that Coinbase was the other “winner” from the ruling and that altcoins would stand to benefit.

Similarly, Tyler Winklevoss, the CEO of cryptocurrency exchange Gemini, said the ruling “decimates” the SEC’s case against Coinbase. His twin brother, Cameron Winklevoss referred to the ruling as a “watershed moment” that will make it difficult for the SEC to claim authority over cryptocurrencies.

Coinbase, Kraken and iTrustShares have already relisted XRP on their respective platforms following the decision.

Words of caution

Despite the positive outcome for XRP, several digital asset lawyers warned against celebrating too soon.

Law firm partner Stephen Palley of Brown Rudnick noted that the summary judgement is only “partial” and that the ruling by Judge Torres does not set a precedent — instead, it may only serve as persuasive commentary for future courts to follow if they so choose.

Palley and others noted that there’s also the chance the SEC may appeal the decision, which presents the possibility that a higher court overturns the rulings made by Judge Torres.

However, Paradigm policy director and former SEC adviser Justin Slaughter said that “the odds are even if they win at the appellate level, they’ll lose at the Supreme Court” because it “has been very hostile to a bunch of agencies recently, on a host of issues from the APA to how staffing at agencies works. I don’t expect them to miss a chance to cite a Democratic judge to thwack a major agency.”

Related: Bad news for Ripple? LBRY judge passes ruling on if secondary crypto sales are securities

Ripple will also need to deal with the SEC’s claim that Ripple CEO Brad Garlinghouse and co-founder Chris Larsen “aided and abetted” the institutional sale of XRP, says U.S. lawyer James “MetaLawMan” Murphy.

The SEC alleged $728 million worth of XRP was sold from institutional sales.

United States-based commercial litigator Joe Carlasare ripped Garlinghouse on this point, asserting that Ripple “made $700 million in unlawful profit.”

This claim was set aside by Judge Torres, and will likely be contested at trial.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?