The lawsuit filed in the U.S. District Court for the Eastern District of Kentucky said the SEC has unilaterally asserted regulatory authority over cryptocurrencies, classifying them as investment contracts like stocks and bonds. It added that digital assets are just assets and not investment contracts and the SEC’s approach encroaches upon states’ rights to police the industry on their own. The lawsuit could have far-reaching implications, especially on the SEC’s pending appeal in the Ripple case, which is one of the biggest factors impacting XRP’s price.
In December 2020, the SEC filed a lawsuit against Ripple Labs, accusing the company of conducting an unregistered securities offering by selling XRP, which the SEC classified as a security. In July of last year, a U.S. court ruled that Ripple’s XRP sales to institutional investors qualified as securities transactions. However, it also determined that sales of XRP on public exchanges did not fall under the definition of a security. In October, the SEC appealed against this ruling, seeking further clarification on the legal status of XRP. Founders of the newsletter service LondonCryptoClub said that XRP’s surge stems from expectations for friendlier regulation under President-elect Donald Trump’s administration.
