Disclaimer: Information found on CryptoreNews is those of writers quoted. It does not represent the opinions of CryptoreNews on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoreNews covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.
The U.S. Securities and Exchange Commission (SEC) has submitted a motion seeking authorization to appeal a federal court decision from last month, which stated that secondary transactions of Ripple’s XRP token do not qualify as securities.
The agency contended that there remain “substantial grounds for difference of opinion” concerning the application of securities laws to cryptocurrency, frequently referencing a comparable case involving Terraform Labs, where the judge reached a different conclusion.
Is the Ripple Case Concluded?
The motion, submitted on Friday, challenged two of Judge Analisa Torres’s decisions from last month: one indicating that “Programmatic Sales” of XRP (e.g., secondary market transactions) did not meet the Howey test, and another stating that “Other Distributions” (e.g., payments for services) also did not fulfill this criterion.
“There are significant grounds for difference of opinion on the correctness of both rulings,” the agency stated. “Since this Court’s decision, another court in this district explicitly disagreed with the Order’s ruling on the Programmatic Sales.”
Following the Ripple ruling, Terraform Labs sought to leverage the situation by filing a motion to dismiss a similar SEC case against the company, which accused it of securities fraud for not registering its now-defunct TerraUSD (UST) stablecoin.
However, District Judge Jed Rakoff dismissed the group’s argument, refusing to differentiate between “institutional” and “secondary” market sales in relation to securities classification. “Howey makes no such distinction,” he noted at that time.
ADVERTISEMENT
Related Posts
The agency cited several previous cases – including its actions against Telegram and LBRY – as evidence that courts have already recognized violations of securities laws when transactions occurred via intermediaries, including exchanges.
“In the opinion of the Terraform court, for example, the inquiry turns on what the issuer objectively invites investors to understand, and not on the method of carrying out the transaction,” the SEC argued.
The agency further asserted that the origin of the purchase for XRP should not influence whether Ripple had created a reasonable expectation of profit for investors – a fundamental aspect defining an investment contract.
Legal Perspectives
Bitcoin-supportive attorney Joe Carlesare voiced his support for the SEC’s appeal on Friday, agreeing that a crypto issuer’s promotions affect both direct buyers and those in the secondary market.
“This is the economic reality of the crypto market — where most participants are relying on the team/devs to promote/develop the token,” he stated.
Conversely, XRP-supportive lawyer Sandy Seth described the SEC’s stance as “utterly ridiculous,” considering that the agency did not contest Torres’s ruling that XRP itself is not a security.
“So if XRP is not a security how can sales of XRP be a sales of a security?” he questioned.
SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.
