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The recent decision by Judge Analisa Torres categorizing XRP as a digital asset has placed the U.S. Securities and Exchange Commission (SEC) in a difficult situation, necessitating important choices regarding the Ripple case.
Four Options on the Table for the SEC
The SEC now faces four possible actions as they respond to the ruling’s aftermath. The most likely course, as noted by cryptocurrency attorney James A. Murphy, is for the SEC to initiate a provisional appeal. This would involve requesting authorization from both Judge Torres and the 2nd Circuit Court of Appeals to appeal the ruling prior to the case’s conclusion.
In order to receive approval for the appeal, the SEC must prove that the ruling presents significant legal questions, indicates differing opinions, and that an immediate appeal could substantially advance the case. Murphy suggests that the increasing political pressure on SEC Chairman Gary Gensler to overturn the Torres ruling, along with the SEC’s “regulation by sanction” approach targeting the crypto sector, may compel them to take this route.
Another possibility is for the SEC to persist with the aiding and abetting lawsuit against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen.
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Alternatively, the SEC might choose to withdraw the allegations against Larsen and Garlinghouse and move forward with an immediate appeal that does not necessitate permission.
Finally, a settlement could be an option, though Murphy considers it improbable due to the consequences of leaving the Torres precedent unchallenged.
Crucial Weeks Ahead
The forthcoming weeks will be critical in determining the trajectory of the SEC v. Ripple case. The SEC’s response to Judge Torres’ ruling will play a significant role in the outcome of this high-stakes legal confrontation.
The SEC’s decision, whether to file a provisional appeal, explore other legal paths, or contemplate a settlement, will shape the case’s direction and may have wider implications for the regulation of digital assets in the United States. As the crypto community awaits the SEC’s decision, the industry remains attentive to how this legal situation develops.
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