In an intriguing twist for the multi-billion dollar fintech titan, Ripple Labs objects to the Securities and Exchange Commission’s (SEC) request to appeal a federal judge’s ruling on the nature of the XRP token. The SEC desires to reframe the XRP as a security when sold to the public – a hoist Ripple has forcefully argued against.
The SEC’s hurried appeal illustrates the profound implications posed by all digital asset cases; still, Ripple argues, varying legal and factual contexts must not be ignored. Pivoting to a state of wait-and-see, the SEC now seeks to pause its legal tussle with Ripple, alleging the firm offered unregistered securities. The pause will last until the appeal sees a resolution.
In the epicenter of 2021, a US court swung the verdict in Ripple’s favor, ruling that selling XRP on exchanges does not synonymize an investment contract. This court decision, however, did label XRP as a security when sold to professional investors as it met the Howey Test’s conditions. As per the SEC, immediate review request is rooted in its potential impact on future cryptocurrency lawsuits, with heavyweights such as Coinbase Global Inc. and Binance Holdings Ltd. possibly capturing the spillover effects.
A conflicting stance was taken by another judge, Jed Rakoff, in a separate SEC case involving Terraform Labs, designating the Terra USD token as a possible security when sold to retail investors. Ripple’s response underlines the abundance of unresolved issues in the case, such as the jurisdiction of XRP sales to institutional investors under the SEC’s purview.
As the SEC’s appeal gains traction, Ripple boldly promises to challenge the ruling classifying these sales as securities transactions. Ripple’s top brass, CEO Brad Garlinghouse and Chairman Christian Larsen, fervently oppose the appeal from SEC, asserting that the judge’s decision was spot-on and any further action should remain in the public interest.
In joining Ripple’s stand, last week, the cryptocurrency industry marked a significant victory against the SEC when an appeals court in Washington squashed the SEC’s move to block Grayscale Investments LLC’s proposed Bitcoin fund. As a result, the SEC was ordered to backtrack its previous rejection and reboot the review process of Grayscale’s application, which had been labeled as arbitrary and non-comprehensive. This episode further gilds the ongoing back-and-forth in regulations and solidifies the tug-of-war between pioneering blockchain entities and regulators.
Source: Cryptonews
