The SEC Says XRP Is NOT A Security
We Are So Back
GM DOers! 😎
The SEC finally made a decision in the Ripple case that’s been going on for YEARS!
Their verdict?
POP YOUR CHAMPAGNE BECAUSE WE ARE SOOO BACK!! 🍾
The crypto markets are seeing some upside, led by Ripple’s mental 70%+ increase since the news broke (at the time of writing).
Now, people are already started to book some profits after years of waiting. 😂
So, is this the start of the bull market we’ve been telling you about all this time? 🤔
If you read Web3 Academy on a regular basis, you’d already know the answer to that. 😏
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Our PRO members will get a hefty discount but as an active reader of Web3 Academy, we wanted to give you a discount too!
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Now, let’s talk about how Ripple ended up fighting the SEC, why they won (partially) the lawsuit, who’ll benefit the most from this verdict, what this means for the entire industry, and of course, should you invest in XRP? 💸
Let’s get it. 👇
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Why Did The SEC Go After Ripple In The First Place? 🕵️
The SEC filed the lawsuit against Ripple in December 2020. Why? 🤷
Because Ripple allegedly conducted an unregistered securities offering by selling $XRP.
The SEC argues that Ripple's sale of $XRP tokens, which raised more than $1 billion in 2013, is essentially the sale of a security and, therefore, according to law, should have been registered. 🧑⚖️
This was concerning because if Ripple was classified as a security, then they’d face stricter regulation & additional legal burdens.
This, most likely, would’ve made Ripple even more centralized than it already was, limiting the growth of the project and discouraging investors. 😕
However, the most concerning thing was that in the case of an SEC win, it’d open the floodgates for the SEC to come after every cryptocurrency out there. 😨
I mean, they already tried by coming after Coinbase, Binance, and a dozen other altcoins. We wrote about that here. But it looks like that’ll stop. Let me tell you why. ⏬
Catch Up On Web3 News 🗞️
This Ripple news is just one of the abundance of news we’ve had this week. In our Rollup, we broke down Coinbase integration with XMTP, Polygon’s new $POL token, Google Play allowing NFTs in their app store, and so much more…
Probably the biggest week for news in at least 6 months. 🚀
🎧 Listen to today’s Weekly Rollup podcast on your fav podcast platform:
The Verdict 🔨
Firstly, the court ruled that a segment of Ripple's fundraising activities (specifically the sale of $XRP to institutions) was indeed an act that classified $XRP as a security. 🚫
However, the issuance of tokens through exchanges (the public listing of their tokens for retail investors) did not fall under the purview of securities law.
In simple terms:
TL;DR:
Sales to users via exchanges are fine 👌
Sales via an ICO/IEO/Launchpad are NOT okay ❌
Offering $XRP as bounties is okay 👍
Using $XRP to invest in other tokens is okay 👍
Providing grants with $XRP is okay 👍
$XRP transfers are okay 👍
Long story short, this calls for a celebration. Why exactly?
Because Ripple is one of the more centralized foundations, having a key figurehead, who had standard sales via exchanges, and formal distribution programs – sounds a lot like a stock, doesn’t it?
If these don't count as securities, it implies that most cryptocurrencies traded on exchanges are 'safe'. 👍
Now, keep in mind this is a summary judgement, so there is potential for further trials and appeals. 🧑⚖️
It doesn't signify the end of the case, but it's indeed a MASSIVE victory and well justified - even applauded by pro-crypto politicians.
Now… Who are the CLEAR winners from this ruling?
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Who Really Won? 🏆
First up, Ripple. No doubts there. Their token's value skyrocketed, but what's more crucial is they're (hopefully) free from the SEC's relentless pursuit.
It's like they've graduated high school and won't have to deal with Billy, the lunch money bandit, ever again. 🎓
Next, exchanges. If institutional sales, OTC deals, and direct token sales are deemed securities, then all trading would pivot back to public order books.
This puts an end to billions of $$$ from VCs in early convertible funding rounds. This will also prevent them from dumping tokens on retail investors once the token hits exchanges.
Then there's Coinbase! And to an extent, Binance. They're not just winners because they are exchanges, but because they've been under the SEC's scrutiny for alleged securities sales.
Now that Ripple's not a security, most other tokens probably aren't either. This means Coinbase can breathe easy.
Binance, however, still has to address their commingling allegations, which is unrelated to this judgement.
Finally, the web3 and crypto industry are winners.
We finally get some clarity as to what’s wrong and what’s right.
It's evident that the SEC can no longer and should no longer be the regulator of crypto.
Does this mean they'll back off? Probably not. But it's crystal clear that they can't intimidate us anymore.
Now… The elephant in the room 🐘
Should You Invest in XRP? PRO Advice For Builders And Investors
This verdict isn’t solely about $XRP. We believe that this ruling will have a ripple effect on many other crypto projects, who can finally build without having to think about breaking the law. 😌
The following section is for PRO members only. But before we get into it, I wanted to remind our PROs of the Advice we wrote back on May 15th in our Coinbase newsletter here.
We told you that $COIN was a good investment at under $60. It’s now at $107 (time of writing) – in only 2 months.
That should put the importance of our weekly PRO Advice in perspective. 😉
