SEC Hints at Potential Appeal of XRP Ruling in Ripple

SEC Hints at Potential Appeal of XRP Ruling in Ripple Labs Lawsuit – Cointelegraph

The U.S. Securities and Exchange Commission has indicated that it may appeal a recent ruling in Ripple Labs’ lawsuit that XRP is not a security when sold to retail investors.

The SEC argues that the ruling violates “fundamental principles of securities law” such as the Howey test, which determines what falls within the category of an investment contract and what does not.

The SEC’s recent comments on Ripple Labs’ lawsuit came in a separate lawsuit against Terraform Labs and its founder, Do Kwon, for allegedly “orchestrating a multi-billion dollar crypto-asset securities fraud.”

In the SEC’s July 21 response to a dismissal motion by Terraform Labs — in which defendants cited the potentially precedent-setting Ripple Labs ruling — the SEC highlighted a number of concerns it has about the court’s recent decision on XRP.

“Contrary to what the defendants allege, much of the Ripple ruling supports the SEC’s claims in this case and dismisses the defendants’ arguments presented here.” With respect to the programmatic and other sales, however, the SEC respectfully notes that Ripple is at odds with Howey and his descendants and imposes unsubstantiated requirements on them,” the SEC stated, adding:

“With all due respect, these parts of Ripple have been wrongly decided and this court should not follow them. The staff of the SEC are considering the various avenues available for further review and intend to recommend that the SEC conduct such a review.”

Related: XRP price is looking for a new bullish catalyst to trigger a move above $1

The SEC’s statements come just days after SEC Chairman Gary Gensler expressed disappointment that the court did not consider XRP a security when sold to retail investors.

“We are pleased that the court has reacted […] that a token for institutional investors is a security […] Disappointed with the other aspect of retail investors. We’re still looking at it and thinking about it,” Gensler explained in an interview with Yahoo Finance on July 17.

On the same day, Gensler also appeared at the National Press Club to give a talk on artificial intelligence and was asked if the court rulings represented an urgent need to create clear regulation for the industry.

However, Gensler was unable to give a concrete answer.

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