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- U.S. District Judge Jed Rakoff dismissed the summary judgment issued by Judge Analisa Torres.
- The SEC has informed the court of its intention to appeal Judge Torres’ ruling.
A New York federal court has determined that the U.S. SEC can continue its fraud case against Terraform Labs and its founder, Do Kwon. However, the court’s decision allows the securities regulator to proceed, which contradicts a previous ruling by Judge Analisa Torres, who concluded that secondary market XRP transactions did not qualify as an investment contract.
According to Bloomberg, U.S. District Judge Jed Rakoff has rejected the summary judgment from Judge Analisa Torres, permitting the SEC’s case against Do Kwon and Terraform Labs to advance.
The Judge remarked:
“The court declines to draw a distinction between these coins based on their manner of sale, such that coins sold directly to institutional investors are considered securities and those sold through secondary market transactions to retail investors are not.”
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No Relief for Defendants
In a prior attempt to have the SEC’s case against Do Kwon dismissed, the defense team referenced a ruling by Judge Torres. The lawyers sought to have the court retract the summary judgment, which determined that secondary market XRP did not qualify as a security.
Kwon’s legal representatives argued that Ripple’s partial victory in court indicated that the SEC lacked a legal foundation to categorize most cryptocurrencies as securities. The defense highlighted Judge Torres’s distinction between institutional and programmatic sales. However, Judge Rakoff did not accept that differentiation.
The SEC has already indicated to the court its plans to appeal Judge Torres’ ruling in its case against Ripple, and during the hearing concerning Terraform and Do Kwon, it requested Judge Rakoff to overlook the summary judgment.
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