SEC Hints at Potential Appeal to XRP Ruling From Ripple Labs Lawsuit – According to court documents, the SEC stated it is now “considering the various available avenues for further review” on the ruling. The United States Securities and Exchange Commission (SEC) is considering the possibility of appealing a recent ruling in the Ripple Labs case. The ruling stated that XRP, when sold to retail investors, should not be classified as a security.
The SEC argues that the ruling goes against “fundamental securities laws principles” such as the Howey test, which determines what falls under the category of an investment contract. In a separate lawsuit against Terraform Labs and its founder, Do Kwon, the United States Securities and Exchange Commission (SEC) made its latest remarks on the Ripple Labs lawsuit.
People Also Read: FTX Sues Founder Sam Bankman-Fried and Three Others for $1bn
The SEC accused Terraform Labs of allegedly orchestrating a multi-billion dollar crypto asset securities fraud. Regarding Terraform Labs’ motion to dismiss, the SEC responded on July 21 and referred to the recent Ripple Labs ruling, which could set a significant precedent. In their response, the SEC pointed out numerous concerns they have with the court’s decision on XRP.
“Contrary to Defendants’ assertions, much of the Ripple ruling supports the SEC’s claims in this case and rejects arguments Defendants have raised here. However, with respect to the Programmatic and other sales, the SEC respectfully avers that Ripple conflicts with and adds baseless requirements to Howey and its progeny,” the SEC stated.
Adding: “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.” The SEC’s comments were issued only a few days subsequent to the expression of disappointment by the agency’s Chair, Gary Gensler.
He had expressed his dissatisfaction with the court’s ruling that classified XRP as not being a security when sold to retail investors. In a July 17 interview with Yahoo Finance, Gensler expressed satisfaction with the court’s recognition of a token for institutional investors as a security. However, he conveyed disappointment with the other aspect concerning retail investors.
People Also Read: US Lawmakers Call on SEC to Stop Regulatory Assault on Crypto
He mentioned that they are still reviewing and considering this matter. On the same day, while speaking at the National Press Club on artificial intelligence, Gensler was asked about whether the court rulings indicated an urgent necessity to establish clear regulations for the industry. Despite the question, Gensler did not offer a specific answer.