On Thursday, August 8, 2024, major cryptocurrencies saw significant gains following Ripple Labs Inc.’s legal win in its ongoing battle with the U.S. Securities and Exchange Commission (SEC). Ripple was ordered to pay a $125 million fine, a decision seen as a victory for the company.
According to Bloomberg, Bitcoin’s price surged by 4.5%, climbing above $57,600. Meanwhile, Ether, the second-largest cryptocurrency by market capitalization, rose nearly 5%. Despite these gains, both tokens remain well below their levels from a week ago, following a sharp decline earlier this week—the largest drop since the FTX crisis in 2022.
The early week downturn in cryptocurrency prices occurred alongside a global stock sell-off. This reflected growing concerns about the global economic outlook, escalating tensions in the Middle East, and market fears that heavy investments in artificial intelligence (AI) technology may not yield the expected returns.
Benjamin Celermajer, Co-Chief Investment Officer at Magnet Capital, noted that the cryptocurrency market remains vulnerable in the aftermath of this week’s events. “If confidence grows that these concerns are overblown, I believe many will see that the market has overreacted with such a severe sell-off,” Celermajer stated.
On Wednesday, a U.S. federal judge ordered Ripple Labs to pay a civil penalty of $125 million. This amount is significantly lower than the SEC’s initial demand, which was close to $2 billion. Ripple argued that it should not have to pay more than $10 billion in fines.
The SEC sued Ripple in 2020, accusing the company of raising funds through the sale of XRP tokens without registering them as securities. In her ruling, U.S. District Judge Analisa Torres noted that the case did not involve allegations of fraud. She issued an order barring Ripple from further violations of securities laws but rejected the SEC’s request for Ripple to disgorge profits from its sales.
The SEC had sought the return of more than $876 million in profits, plus over $198 million in interest, and a civil penalty of $876 million. However, Judge Torres stated that the SEC failed to demonstrate that Ripple’s failure to register its sales with the SEC caused significant harm to investors.
Following the ruling, the price of XRP surged by 25% to $0.64. However, despite this jump, the price of the world’s seventh-largest cryptocurrency has seen little change over the course of this year.
The judge’s decision comes at a time when the value of digital currencies has been under pressure due to risk aversion in global markets.