XRP sales to institutions: A ticking time bomb?

Judge Analisa Torres’ verdict was clear: XRP is not a security. A great victory, chants the crypto community, which saw the recent SEC attacks as a vendetta. Except there is a damper. The American regulator has identified a $728.9 million direct sale of XRP to investors. In such a context, the Ripple token becomes a “security” again. A cold shower for the cryptosphere.

Ripple and its stories of illegal sales

A phew of relief was felt in the cryptosphere after Judge Torres stripped XRP of the “security” qualification. Many saw in this verdict the advent of the heyday of altcoins, especially the assets battered by the SEC lately.

But Investopedia emphasized a point neglected by the media on the same day. Indeed, the federal judge noted that certain activities of Ripple, in particular those relating to its institutional sales, are far from legal.

institutional-sales-xrp
Note from Judge Torres regarding XRP sales to institutions

First, Ripple, through wholly-owned subsidiaries, sold XRP directly to certain counterparties (primarily institutional buyers, hedge funds and ODL customers) pursuant to written contracts (the “Institutional Sales”). SEC 56.1 Resp. 105; Defs. 56.1 Resp. 5-6, 619-20, 716. The SEC claims that Ripple sold approximately $728.9 million worth of XRP in these Institutional Sales. Defs. 56.1 716. »

In other words, institutional sales of XRP by Ripple Lab allow another attack by the SEC. This is an illegal offer of securities. Will the affair know other complications ?

Explanations

The fact that many investors have signed agreements not to sell XRP in their possession for a certain time deprives it of the status of currency or utility token. So when these decided to speculate on Ripple’s token for a while blocking periodthese XRP could not have acted otherwise.

And to drive the point home, the court mentioned the existence of investment contracts stipulating that the buyer offered itself XRP “ solely for reselling or otherwise redistributing ».

This has caused XRP institutional investors to make purchases as an investment based on Ripple’s efforts. Unfortunately, this concerns a very important aspect of the Howey test.

Some analysts believe the SEC will not sit idly by with such weapons in its hands. Moreover, it refutes any argument relating to ignorance of the law. At this point, a question arises: does Gary Gensler’s team intend to continue its crackdowns on the crypto industry?

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