Ripple Labs scored a partial victory in its fight with the U.S. Securities and Exchange Commission (SEC) in a court ruling that brought a modicum of regulatory clarity for the cryptocurrency industry. The sale of Ripple’s XRP tokens on exchanges and through algorithms did not constitute investment contracts, a judge in the U.S. District Court for the Southern District of New York ruled Thursday. However, the institutional sale of the tokens did violate federal securities laws, the judge ruled. XRP soared as much as 80% on the news with crypto exchanges Coinbase and Gemini among those saying they might list or re-list the token. Early reads from legal experts, though, suggest the ruling falls short of settling the question of whether and under what circumstances a digital asset meets the definition of a security under U.S. law.

XRP 24-hour price chart

Ripple’s XRP has surpassed Binance’s BNB token to become the world's four-largest digital asset by market cap after its 66% post-court ruling advance brought its valuation to $41.44 billion, according to CoinDesk data. BNB – which rallied 6.5% in wake of the court ruling – now has a market cap of $40.57 billion. Ripple bulls however, shouldn’t forget the second part of yesterday’s court decision. “The Court has found Ripple to be in violation of securities laws, specifically in relation to direct sales to institutional investors,” wrote CoinShares’ Head of Product Townsend Lansing in an email to CoinDesk. “As such, XRP is not only deemed a security, but questions have arisen regarding the legality of its offering,” he continued. “In regards to these sales, the Court has confirmed that the law was indeed violated, marking a considerable victory for the SEC and setting a precedent for its legal actions against other cryptocurrencies."

Alex Mashinsky, co-founder and former CEO of insolvent crypto lender Celsius, was arrested in New York on Thursday following an investigation into the company's collapse, the U.S. Department of Justice (DOJ) confirmed to CoinDesk. Mashinsky and others are charged with seven criminal counts including securities fraud, commodities fraud, wire fraud and conspiracy to manipulate the price of Celsius' token CEL, according to the unsealed DOJ indictment. The criminal charges were accompanied by three separate lawsuits against Mashinsky and Celsius by the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and Federal Trade Commission (FTC).

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Cryptocurrencies across the board rallied along with crypto-related stocks after a federal judge ruled that the sale of Ripple’s XRP tokens on exchanges and through algorithms did not violate federal securities laws on Thursday.

Several blockchain native tokens, such as Solana (SOL), Polygon (MATIC), and Cardano (ADA), all of which the Securities and Exchanges Commission (SEC) deemed unregistered securities in previous lawsuits, rose about 15% on the news.

Among stocks, Coinbase – the subject of its own SEC lawsuit in June alleging the sale of unregistered securities – soared 24% Thursday to its highest level since August 2022 and MicroStrategy (MSTR) added 12%. Crypto miners were also sharply higher, with Marathon Digital (MARA) and Riot Platforms (RIOT) gaining 14% and Hut 8 Mining (HUT) jumping 19%.

- Omkar Godbole