The Ripple Labs case recently decided that XRP is not a security in transactions involving ordinary investors.
The U.S. Securities and Exchange Commission (SEC) has hinted at the potential of appealing this decision. In the wake of the court’s decision, the SEC, according to court documents, stated that it is carefully considering various avenues for further review regarding the classification of XRP as a non-security.
The SEC argues that the ruling contradicts the core principles of securities laws, particularly the Howey Test, which plays a vital role in defining whether an investment contract falls within the security ambit or not. Deaton is a well-known personality in crypto-law tweeted
Ripple Labs Lawsuit Triggers SEC’s Comments In Another Case
In a separate lawsuit against Terraform Labs and its founder, Do Kwon, the SEC has brought up the Ripple Labs lawsuit, alleging that Terraform Labs orchestrated a massive crypto asset securities fraud.
The SEC’s response on July 21 to Terraform Labs’ motion to dismiss referred to the Ripple Labs ruling, highlighting numerous issues that the SEC holds against the court’s recent determination on XRP.
“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.”
SEC Chair Gary Gensler recently expressed his disappointment with the court’s ruling on XRP, specifically mentioning that he is content with XRP being considered a security for institutional investors but unhappy about the exclusion of retail investors.
In an interview with Yahoo Finance on July 17, Gensler made the claim. “We are pleased that the court addressed […] that a token for institutional investors is a security, […] disappointed in the other aspect about retail investors. We are still taking a look at that and considering it.”
During his appearance at the National Press Club on the same day, Gensler was questioned about whether the court’s rulings have intensified the necessity for comprehensive regulations within the cryptocurrency industry. However, Gensler refrained from providing a specific answer to this crucial question.