CRYPTO — The value of crypto company stocks dropped on Tuesday after a verdict by a judge in the United States that contradicted an earlier decision made by a judge in a separate case and stated that digital currencies might be regarded securities when marketed to the general public. The Securities and Exchange Commission (SEC), which is the plaintiff in both instances, received support from the ruling because it validated its position.
The US regulator has maintained that many cryptocurrencies are securities and, as a result, should be regulated by the SEC. The SEC has used this assertion as the basis for several lawsuits against significant actors in the market. On Tuesday, the value of US cryptocurrency exchange Coinbase Global (COIN), which is the subject of a similar complaint brought by the SEC, fell by as much as 8.5%. The price of bitcoin measured in US dollars (BTC-USD) dropped below $29,000 as well.
In the United States District Court for the Southern District of New York, US Judge Jed Rakoff issued a ruling that contradicted an earlier decision made by Analisa Torres, who was also a judge in the same US district court. This new verdict caused a significant shift in the stock market.
Midway through the month of July, Torres arrived at the conclusion that the XRP digital token that was distributed by Ripple Labs was considered a security only when it was offered for sale to institutional investors, but it was not considered a security when it was acquired by the general public. In the matter before him, in which the SEC has asserted that the issuer of the stablecoin, Terraform Labs, marketed unregistered securities, Rakoff took issue with that particular point of view.
“The Court rejects the approach recently adopted by another judge of this District,” he stated in the opinion. Some in the cryptocurrency community, who had praised Torres’s earlier verdict, were left disappointed as a result of the disagreement. “Well, it was a fun few weeks,” said Gabriel Shapiro, who is the general counsel for Delphi Labs, which is a digital asset research and consulting organization. In a tweet, the chief legal officer of Ripple Labs, Stuart Alderoty, stated that the recent finding from Rakoff “changes NOTHING about the Ripple ruling that XRP is not a security.” Rakoff’s decision was issued earlier this week.