The U.S. Securities and Exchange Commission (SEC) has told a federal court that some portions of the Ripple ruling regarding XRP “were wrongly decided.” The regulator has asked the court to ignore parts of the ruling, noting that “SEC staff is considering the various available avenues for further review and intends to recommend that the SEC seek such review.”
SEC Disagrees With Ripple Ruling on Retail Investors
The U.S. Securities and Exchange Commission (SEC) stated in a new filing for its lawsuit against Terraform Labs and its co-founder Do Kwon that some decisions in the court ruling on the SEC v. Ripple case regarding XRP were wrong.
While noting that the Ripple ruling regarding institutional investors supports the SEC’s claims, the securities watchdog stated: “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 regulator added:
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 filing was in response to a filing earlier this week from lawyers representing Terraform Labs and Kwon seeking to dismiss the regulator’s lawsuit. In February, the SEC filed a lawsuit against Terraform Labs and Kwon, accusing them of engaging in a fraudulent scheme and selling unregistered securities, which resulted in the loss of at least $40 billion worth of market value.
The lawyers for Terraform Labs cited the Ripple ruling as support for their motion to dismiss the lawsuit, stating that the Ripple decision “confirms the legal insufficiency of the SEC’s argument” that certain tokens, including the failed stablecoin terrausd, were securities.
While the crypto community celebrated the Ripple-XRP ruling, there were cautionary voices. Former SEC internet enforcement chief John Reed Stark and lawyer Bryan Jacoutot believe that the ruling rests on shaky ground, warning that the decision could be overturned.
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