Bitcoin and other cryptocurrencies rose in value on Friday after the US Securities and Exchange Commission was handed a setback in its legal campaign against the hard-hit sector.

The increases came after a federal judge in Manhattan partially dismissed the SEC’s case against the creators of the XRP cryptocurrency, Ripple Labs, who were accused of marketing their currency without first registering it with the Wall Street regulator.

The SEC has argued for years that certain digital currencies are financial securities, like stocks or bonds, and are therefore subject to its supervision as an investment product.

The crypto community rejects the argument bitterly and has struggled to withstand the increased scrutiny as well as a string of scandals and arrests of top figures in the sector.

“There are still questions about how this applies to other tokens and whether the ruling will hold up, but for now, it’s a huge win for the industry,” said a note from financial advisor The Motley Fool.

In a second day of gains, Ethereum was up 5.69 per cent in the past 24 hours and Elon Musk-supported Dogecoin was up more than 7 per cent.

Bitcoin, the main asset in the crypto space, was up 2.3 percent over the past 24 hours, Judge Analisa Torres ruled that this argument could not be upheld for individuals who bought XRP, although she agreed with the SEC regarding institutional investors.

This ruling is a slap in the face for the SEC, which has changed tack in recent months and taken the world’s largest cryptocurrency exchange platform, Binance, and the leading US player, Coinbase, to court.

Since 2020, a dozen industry participants have been targeted by the regulator, determined to clean up what the body’s chairman, Gary Gensler, describes as the “wild west”.

The SEC’s critics, including members of US Congress, accuse it of trying to impose an old and inappropriate regulatory framework on a new technology.

Coinbase gained nearly 25 percent over the session on Wall Street on Thursday though it dipped slightly on Friday.