The recent Ripple Labs case concluded that XRP does not qualify as a security in transactions involving ordinary investors. However, this decision has triggered a potential appeal from the U.S. Securities and Exchange Commission (SEC).
Following the court’s verdict, the SEC, as revealed in court documents, is meticulously examining various avenues for further review concerning XRP’s classification as a non-security.
SEC Challenges Ripple XRP Ruling, Citing Core Securities Laws Principles
The SEC argues that the ruling contradicts fundamental principles of securities laws, with a particular focus on the Howey Test, a vital benchmark used to determine whether an investment contract falls under the security category. Deaton tweeted,
Ripple Labs Lawsuit Echoes In Case, Prompting SEC Opinion
In a separate lawsuit involving Terraform Labs and its founder, Do Kwon, the SEC references the Ripple Labs case, alleging a significant crypto asset securities fraud orchestrated by Terraform Labs.
In response to Terraform Labs’ motion to dismiss on July 21, the SEC pointed out numerous issues it holds against the court’s recent ruling on XRP, shedding light on the case’s broader implications.
Respectfully, those portions of Ripple were wrongly decided, and this Court should not follow them. SEC staff is considering the various available avenues for further review and intends to recommend that the SEC seek such review.
Gary Gensler, the SEC Chair, recently conveyed his disappointment with the XRP ruling, expressing satisfaction with XRP’s classification as a security for institutional investors but discontent with its exclusion for retail investors.
According to Gensler, who spoke with Yahoo Finance on July 17. “We are pleased that the court addressed the aspect of XRP as a token for institutional investors, considering it a security. However, we are disappointed in the other aspect of retail investors. We are still taking a look at that and considering it.”
During a National Press Club appearance on the same day, Gensler faced inquiries about whether the court’s rulings underscore the urgency for comprehensive cryptocurrency industry regulations. Nevertheless, he refrained from providing a definitive response to this pressing issue.
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