Court documents reveal that the SEC is currently reviewing the options for further examination after the ruling that determined XRP is not a security.
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The U.S. Securities and Exchange Commission is considering the possibility of appealing the recent ruling in the Ripple Labs lawsuit, where XRP was deemed not to be a security in its sale to retail investors.
The SEC contends that the ruling contradicts essential securities law principles, including the Howey Test, which determines whether something qualifies as an investment contract.
Do we really want a judge to ask herself: Does my strict application of the Howey test in this case result in an outcome in 2023 that comports with the policy implications behind a 1934 statute? https://t.co/acMNRc00B6
— John E Deaton (@JohnEDeaton1) July 22, 2023
The SEC made its recent comments on the Ripple Labs lawsuit during a separate lawsuit against Terraform Labs and its founder Do Kwon. The SEC accused them of being involved in an alleged “multi-billion dollar crypto asset securities fraud.”
In response to Terraform Labs’ motion to dismiss, the SEC, in its July 21 statement, referenced the recent Ripple Labs ruling, which could set a precedent. The SEC raised various concerns regarding the court’s decision on XRP.
The SEC responded to Terraform Labs’ assertions, stating that the Ripple ruling largely supports its claims and dismisses arguments raised by the defendants. However, the SEC believes that the Ripple decision introduces unfounded requirements concerning the Programmatic and other sales, conflicting with the Howey Test and its established principles.
The SEC respectfully disagrees with certain aspects of the Ripple ruling, considering them to be incorrectly decided. As a result, they are contemplating different avenues for further review and intend to recommend the SEC to seek such review.
The SEC’s statements follow closely after SEC Chair Gary Gensler expressed his disappointment with the court’s decision to classify XRP as not being a security when sold to retail investors.
In a July 17 interview with Yahoo Finance, SEC Chair Gary Gensler expressed satisfaction with the court recognizing tokens for institutional investors as securities but revealed disappointment with the aspect concerning retail investors. He emphasized that they are still evaluating the matter. On the same day, during a talk on artificial intelligence at the National Press Club, Gensler was asked if the court rulings signaled an urgent necessity to establish clear regulations for the industry.
Gensler did not provide a specific answer to the question about the urgent need for clear regulations during his talk at the National Press Club.
The SEC arguing that a court didn’t follow Howey is rich… On its own website, the SEC has acknowledged that Fed courts require commonality & then it goes on to say that it doesn’t require commonality in its analysis or view commonality as a distinct part of Howey. If the SEC’s… https://t.co/CX6Kwfh3cJ
— exlawyer.eth/tez (@exlawyernft) July 22, 2023
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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