Ripple (XRP) Wins Landmark Ruling Against SEC

07.20.2023

Market Overview: 

Ripple (Partially) Wins

Ripple Labs, the company behind the Ripple decentralized ledger and associated asset XRP, won a landmark ruling against the SEC. The regulator had alleged, in part, that XRP was a security and that therefore Ripple Labs’ sales of XRP constituted unregistered securities offerings. A federal judge struck down most of the SEC’s claims, ruling that XRP itself is not a security and that certain sales and distributions of XRP by Ripple Labs did not constitute securities offerings. However, nearly $730 million of sales of XRP sold in “institutional sales” , to institutions such as hedge funds, were securities transactions that should have been properly registered with the SEC. XRP has soared 66% since the news. The SEC can appeal the decision but has not yet done so.

Unjail Yourself

Alex Mashinsky, the founder and former CEO of bankrupt Celsius Network, was arrested in New York last week. Mashinsky, an alleged conman who also claimed to have invented Voice Over internet Protocol (VOiP), is alleged to have engaged in a “years-long scheme to mislead customers”. He is being criminally prosecuted by the Department of Justice while simultaneously defending himself against lawsuits by the SEC, CFTC, FTC, and a slew of other state and federal prosecutors. According to the complaint, Mashinsky’s schemes targeted small retail investors, and wiped out the savings of millions of people when Celsius collapsed. 

Open Interest

The Bank of International Settlements reported that 93% of banks worldwide are exploring stablecoins or central bank digital currencies. Nearly 20% of banks said they would be willing to launch a token in the next three years. Interest in the stablecoins has been one of the most enduring effects of the 2021 crypto boom, with banks recognizing the efficiency and cost-savings that such technologies can add to their outdated systems. 

Surveillance 

The CBOE announced a Surveillance Sharing Agreement with Coinbase to support five aspiring Bitcoin ETF issuers – Wise Origin, WisdomTree, VanEck, Invesco Galaxy, and ARK 21Shares. The SEC has previously claimed that a lack of rigorous Bitcoin market surveillance prevents the approval of spot BTC ETF. The announcement sent shares of Coinbase surging.

MATIC Upgrades

Polygon, one of the broadest developers of EVM-based networks, proposed a revamp of their native MATIC token to better support their multiple protocols. MATIC is currently used to provide economic security on the Polygon PoS chain. With the launch of Polygon zkEVM, alongside Polygon Miden and Polygon Supernets, the developer wants to extend MATIC’s security umbrella and economic utility across the entire ecosystem. Enter POL, an upgraded version of MATIC that can be used natively across Polygon networks. More details here.

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• Axelar and Microsoft have teamed up to develop and offer blockchain interoperability products. As part of the deal, Axelar’s cross-chain stack will be available to Microsoft customers via the Azure cloud marketplace.
• Argentina welcomed its first Bitcoin futures contract on July 13, just three months after the country’s securities watchdog approved the underlying index as part of a strategic innovation agenda. According to Matba Rofex, the trading platform behind the investment vehicle, it is the first Bitcoin futures contract in Latin America.
• Google Cloud recently partnered with Voltage, an infrastructure provider specializing in the Bitcoin Lightning Network. The partnership will allow one of the world’s largest cloud computing providers to roll out Bitcoin-based services worldwide while assisting the expansion of Voltage’s operations.
• The European Commission on Tuesday set out its plans for the metaverse, confirming leaked plans previously reported by CoinDesk that would see new standards and governance for virtual worlds. The commission isn’t proposing any new laws and is vague about funding for what it sees as the next generation of the internet, but politicians are eager for the bloc to make the most of a technology they see as having economic and ethical salience.

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• Congressman Ritchie Torres has asked for two separate independent investigations of the U.S. Securities Exchange Commission (SEC) for its “haphazard and heavy-handed approach to digital assets”. Rep. Torres (D-N.Y.) requested investigations into the SEC granting a special purpose broker-dealer (SPBD) licence to Prometheum, “a trading digital assets platform that does not trade digital assets,” under unusual circumstances, and for its failure to create a rigorous but workable process for registering real-world digital assets platforms.
• In a tweet on July 13, Justin Slaughter, policy director at research firm Paradigm and a former SEC senior advisor, expressed his opinion on the future of the Lummis-Gillibrand Responsible Financial Innovation Act bill. He stated, “This bill is less likely to pass than McHenry-Thompson for one simple reason: neither Lummis or Gillibrand lead a Senate committee.”, indicating the bill may not pass the U.S. Congress due to the lack of committee leadership from its sponsors. The Senators Cynthia Lummis and Kirsten Gillibrand-sponsored bill seeks to provide regulatory clarity for the emerging crypto industry. It grants the Commodity Futures Trading Commission (CFTC) oversight functions over crypto exchanges.

Disclaimer: The views and opinions expressed herein are those of the author alone and do not represent Wave Digital Assets LLC or any of its affiliates (collectively, “Wave”). The author and/or Wave may hold investment positions in some of the assets discussed. Nothing in this material or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. This material is not intended to provide accounting, legal or tax advice. Certain information contained herein has been obtained from third-party sources, has not been independently verified and should not be viewed as being endorsed by Wave. Such information is believed to be accurate as of the date of its publication. No representation or warranty is made, express or implied, with respect to the accuracy or completeness, and readers should not place undue reliance on the information contained or linked to herein. Certain statements in this material provide predictions and there is no guarantee that such predictions are currently accurate or will ultimately be realized. Past performance is not indicative of future results.

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