Ripple's XRP Status Under Fire: Landmark Ruling in Jeopardy

The Ripple ruling of July 2023, which classified XRP as a non-security in secondary sales, faces the possibility of being overturned. Two federal judges have criticized the application of the Howey Test by Judge Torres in the ruling, raising concerns about its coherence. The classification of XRP as a security in institutional sales by Ripple remains. Despite the potential risk, XRP price has shown resilience and remains above the critical $0.60 level.

Ripple Ruling in Jeopardy: XRP's Security Status Hangs in the Balance

The legal battle surrounding Ripple's XRP cryptocurrency has taken a dramatic turn, with the landmark July 2023 ruling labeling XRP as a non-security in secondary sales now facing the threat of being overturned. Two federal judges have dismissed the application of the Howey Test to XRP, casting doubt on the previous classification.

XRP's Contested Security Status

The July 2023 ruling by Judge Analisa Torres differentiated between XRP sales on exchanges, deeming them "non-security" transactions, and institutional sales conducted by Ripple itself, which were classified as "securities." This distinction was based on the application of the Howey Test, a legal framework designed to determine whether an asset qualifies as an investment contract and, therefore, a security under federal law.

Challenged Application of the Howey Test

The Howey Test requires an asset to meet four criteria to be considered a security: an investment of money, an expectation of profit, a common enterprise, and reliance on the efforts of others. Judge Torres's application of the test to XRP has come under fire, with critics arguing that it was improperly applied.

Two federal judges presiding over unrelated cases have now expressed skepticism about the logic behind Judge Torres's ruling. They maintain that the Howey Test is not suitable for determining the security status of digital assets like XRP, which possess unique characteristics.

American Journalist Highlights 'Incoherence'

Charles Gasparino, an American journalist and XRP expert, has highlighted the "incoherence" of Judge Torres's application of the Howey Test. He notes that the ruling failed to address the "decentralized" nature of XRP and its use as a "currency" rather than an "investment contract."

Market Reaction and Ripple's Response

The news of the challenged ruling has sent shockwaves through the XRP community. Traders and investors are speculating on the potential consequences for the cryptocurrency's price and regulatory status.

Ripple's Chief Legal Officer, Stuart Alderoty, has acknowledged the skepticism expressed by the federal judges, suggesting that the company is prepared to defend its position. Alderoty has also commented on the ongoing lawsuit against the Securities and Exchange Commission (SEC), expressing confidence in Ripple's ability to produce evidence that XRP is not a security.

Whale Accumulation and XRP's Price Trend

Despite the uncertainty surrounding the legal status of XRP, on-chain metrics indicate that whales, or large holders, have been accumulating the cryptocurrency. Data from Santiment shows a significant increase in the holdings of XRP whales, particularly those holding between 10 million and 100 million tokens.

This accumulation suggests that whales are betting on XRP's long-term potential, regardless of the regulatory headwinds. The price of XRP has remained relatively stable, trading above the psychologically important $0.60 level, despite the recent market turmoil.

Technical Analysis: XRP's Potential Recovery

Technical analysis of XRP's price chart indicates a bullish trend. The altcoin has been consolidating within a tight range for over a year, with the support level at $0.60 remaining intact.

Indicators such as the Relative Strength Index (RSI) and the Awesome Oscillator (AO) suggest that buyers are still in control of Ripple. A recovery to the year-to-date peak of $0.7440 is a possibility, representing a potential gain of approximately 16% from the current price.

However, traders should remain cautious and monitor Bitcoin's price action, as a correction in the leading cryptocurrency could impact the altcoin market, including XRP.

Conclusion

The Ripple ruling that labeled XRP as a non-security in secondary sales is facing a significant challenge. The application of the Howey Test to XRP has been questioned by two federal judges, casting doubt on the validity of the classification.

The legal battle between Ripple and the SEC is ongoing, and the outcome will ultimately determine the regulatory status of XRP. Despite the uncertainty, whales continue to accumulate the cryptocurrency, and technical analysis suggests a potential recovery in the near future.