Ripple scripted history when it concluded its longstanding legal dispute with the SEC regarding the XRP token. Although the crypto community celebrated the decision, the verdict was a partial win for the blockchain firm, as Judge Analisa Torres ruled that the XRP token is not a security when sold to the general public but left the token’s sales to institutional clients open-ended.
Recently, there were new documents filed in the Terraform Labs case that suggest that SEC Chair Gary Gensler may appeal the Ripple rulings. This news has raised concerns within the community. However, Ripple counsel Stuart Alderoty believes that the SEC’s appeal has the potential to further solidify Ripple’s victory.
We think the judge got that right, and we think that was a faithful application of the law, and I think a court of appeals will not only affirm that but maybe even amplify that to an even greater extent.
During a TechCrunch podcast on July 26, Alderoty stated that his team is prepared to face any legal challenges from the SEC and maintained his belief that the XRP token is not an investment contract.
The lawyer also criticized the SEC’s enforcement-based regulation approach, emphasizing the need for a logical and comprehensive regulatory framework for crypto in the United States. “Because of the SEC’s refusal to faithfully apply the law, the U.S. has been visibly falling behind the rest of the world,” he said.
Ripple Counsel Shrugged Off Operational Concerns
According to the July 13 verdict, the SEC was not able to prove that the speculative investors had “a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.” The court stated that XRP was not a security but acknowledged that some institutional sales of the token did qualify as securities transactions.
“She [Judge Analisa Torres] found — although we had disagreed with her — that our earlier sales directly to institutional buyers had the attributes of a security and should have been registered,” Alderoty said then.
He further dismissed worries that Ripple’s operations would be impacted by that aspect of the decision, noting that the majority of its clients are located outside of the United States.