New York (CNN) 鈥� The crypto industry notched a crucial win in its battle with regulators Thursday when a judge ruled that Ripple Labs did not violate federal securities law by offering its XRP token on public exchanges 鈥� undermining a key argument made by the Securities and Exchange Commission.
The news sent the price of XRP, a token designed for cross-border payments, up some 70% to about 92 cents.
The opinion from Judge Analisa Torres of the Southern District of New York, who stated that XRP was 鈥渘ot necessarily a security on its face,鈥� partially validated the crypto industry鈥檚 contention that digital assets should not be regulated as securities. The SEC, under Chairman Gary Gensler, has aggressively argued otherwise.
Torres鈥� ruling did fall partly in the SEC鈥檚 favor, as she found that some of Ripple鈥檚 sales 鈥� to hedge funds and other sophisticated buyers 鈥� did violate securities laws.
Still, Ripple鈥檚 chief legal officer, Stuart Alderoty, called it 鈥渁 huge win.鈥�
鈥淎s a matter of law,鈥� he tweeted, 鈥淴RP is not a security鈥aybe we can now start a rational conversation about crypto regulation in this country.鈥�
An SEC spokesperson said the agency was pleased with the court鈥檚 finding that upheld its argument that some XRP transactions were illegal. 鈥淲e鈥檒l continue to review the decision,鈥� the spokesperson said.
Under Gensler, the financial watchdog has taken an toward the crypto industry. Gensler has said that most crypto tokens 鈥� with bitcoin as a notable exception 鈥� are securities that fall under the SEC鈥檚 jurisdiction. Recently, the SEC has gone after some of the biggest names in crypto, including , accusing them of running illegal exchanges in the United States.
Thursday鈥檚 ruling comes after a three-year legal battle and sets a precedent for other crypto cases, said Teresa Goody Guill茅n, a former attorney with the SEC office of the General Counsel who is now a partner at聽BakerHostetler.聽
鈥淭his is a significant opinion that has the potential to change the landscape of the SEC鈥檚 enforcement efforts,鈥� she said in an email, adding that the case will help Coinbase and Binance defend themselves against the SEC鈥檚 allegations that they are operating as unregistered securities exchanges, brokers and clearing agencies.
Part of the Ripple case remains unsettled and is expected to go to trial. Torres found that it will be up to a jury to decide whether Ripple executives aided in the illegal sales to institutional investors.
鈥楽ome much needed sunlight鈥�
Despite the nuance of Torres鈥� ruling, crypto investors are cheering it as a long overdue win.
The digital asset space hasn鈥檛 had a lot of positive news in the past year, as a string of once-powerful companies and entrepreneurs have stumbled -鈥� most notably FTX and its former CEO
Even on Thursday, news of Ripple鈥檚 legal win was largely overshadowed by the arrest , the former CEO of Celsius, another crypto juggernaut that went bust last year. Mashinsky pleaded not guilty to wire fraud and other crimes stemming from allegations that he pumped the price of Celsius鈥� native token and misled customers.
Meanwhile on Friday, the that Binance, the world鈥檚 largest crypto exchange, was in the process of laying off 1,000 people 鈥� roughly a third of its global staff. A Binance spokesperson declined to comment specifically on the report but acknowledged the company was reassessing resource allocation and focusing on 鈥渢alent density across the organization.鈥�
鈥淭he crypto industry has had a dark cloud hanging over it ever since the SEC went after Coinbase and Binance,鈥� said Antoni Trenchev, co-founder and managing partner of the crypto lender Nexo. 鈥淭his ruling, although nuanced, provides some much needed sunlight and cheer into the altcoin space, those non-Bitcoin tokens.鈥�
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