Still smarting from its legal defeat earlier this month, the Securities and Exchange Commission (SEC) has vowed to appeal the decision claiming the judge made an error. The reaction from the crypto community and legal experts has been vociferous.
On July 21, the SEC stated that it would appeal the decision by U.S. District Judge Analisa Torres in the ongoing battle with Ripple Labs.
SEC Fights Back
The ruling that Ripple’s XRP sales to investors did not violate securities laws has given hope to the rest of the crypto industry. It has also given hope to the raft of other defendants also facing SEC lawsuits for allegedly selling securities.
One such defendant is Terraform Labs co-founder Do Kwon, who is currently in jail. According to the WSJ, Kwon is trying to use the Ripple result in his own battle against the regulator, which has accused him of fraud.
The SEC stated that the judge presiding over his case should not seek guidance from the Ripple ruling. Judge Torres’s decision “adds baseless requirements” to the test that determines whether an asset is a security, it said before adding that there will be a “further review.”
Still harking back to 90-year-old legislation, the SEC’s lawyers said the reasoning “is impossible to reconcile with all of these fundamental securities laws principles.”
“SEC staff is considering the various available avenues for further review and intends to recommend that the SEC seek such review.”
Responding on July 22, Coinbase chief legal officer Paul Grewal said:
“If only the Commission cited one case, any case, in which the level of “Howey-ness” required varies based on the sophistication of the investors at issue. Tellingly, they don’t, and once more argue policy over the law as it is.”
Mark Cuban followed up, stating that the SEC also labeled every buyer as an “investor.” That’s not the case, and Ripple made that clear, he added. “Securities have one purpose, to be a security. For a DeFi or CEX buyer, it’s impossible to know why a buyer buys.”
“Hammers only see nails,” concluded Grewal.
XRP Price Outlook
The Ripple price dropped 2.3% on the day. As a result, XRP had retreated to $0.774 at the time of writing.
Moreover, the cross-border payment token has dropped 8% since its 2023 high on Jul7 20. Nevertheless, XRP has managed to hold most of its gains resulting from the ruling and is up 66% over the past fortnight.
Disclaimer
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