SEC head Gary Gensler has spoken for the first time after blockchain firm Ripple earned major relief in the recent precedent-setting ruling that said XRP was “not necessarily a security on its face”. It wasn’t a total victory for Ripple, as the judge also ruled that sales of XRP by Ripple to institutional buyers do count as unregistered sales of securities.
Although he was happy with the part of the order that found that the institutional sale of the tokens did, in fact, violate federal securities laws, Gensler voiced his disappointment with the district court’s decision on exchanges and programmatic sales. Speaking at the National Press Club in Washington, DC, Gensler said,
We’re pleased with that decision recognizing the importance of protecting investors on institutional investors. While disappointed with what they said about retail investors, we’re still looking at it and assessing that opinion.
According to the court, 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.” As mentioned earlier, the watershed ruling did not represent a total win for Ripple.
The judge stated that XRP was not a security but acknowledged that some institutional sales of the token did qualify as securities transactions. For instance, the court determined that the $728.9 million in XRP sales to institutions did qualify as securities because there was a common enterprise and an expectation of profit, and Ripple is still liable for those sales.
On the other side, General Counsel Stu Alderoty admitted that it won’t shy away from an appeal and that the company would analyze its future course of action.
Ripple’s Business Won’t Suffer: Stu Alderoty
“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,” he said.
He also stated that Ripple’s business won’t be affected by that component of the ruling as its customers are primarily based outside of the U.S.
“We’ll study the judge’s decision; we’ll look at our client’s needs; we’ll look at the market; and we’ll see if there’s a situation here that complies with the four corners of what the judge found when it comes to institutions,” Alderoty added.