In a recent ruling, United States Bankruptcy Judge Gracecarver has cited the recent Ripple case in order to reject CEL’s claim that its tokens should be classified as securities. In the case, the court granted Ripple’s motion to dismiss a lawsuit which alleged that its XRP tokens constituted securities under U.S. law.
CEL, a blockchain technology company, had argued that its tokens should be classified as securities, as defined under Section 12(g) of the Securities and Exchange Act of 1934. However, Judge Carver disagreed, citing the recent ruling in the Ripple case.
In her ruling, Judge Carver stated that CEL’s token, CELT, did not meet the definition of a security under U.S. law, citing the Ripple case as an example. She also noted that CELT tokens are primarily used to purchase products and services on the CEL Platform, rather than for speculative investment.
Judge Carver concluded her ruling by citing the U.S. Supreme Court’s ruling in the Howey test, which defines what constitutes a security. In the ruling, she stated that in order for CEL’s tokens to be considered a security, investors should have an expectation of profits from the efforts of others. Since that was not the case with CEL’s tokens, Judge Carver dismissed CEL’s classification as a security.
This ruling once again shows the impact that the Ripple case has had on the cryptocurrency industry. It is now clear that the court’s ruling is being used to set precedents in other cases involving the classification of cryptocurrencies.
