In a recent statement, the US said that the decision in favor of Ripple by a federal judge last week was a mistake. That’s why the U.S. Securities and Exchange Commission (SEC) is preparing to appeal some of the recent ruling in its lawsuit against Ripple Labs, according to lawyers representing the institution. The controversial decision was on the agenda, and the SEC’s lawyers expressed their firm belief that “the wrong decision was made.” This also affects Terraform Labs, behind altcoin LUNC/LUNA and UST. Here are the details…
Statement from SEC lawyer about Ripple and Terra
Attorneys for the U.S. Securities and Exchange Commission pointed to a separate pending litigation to propose the possible appeal of parts of the agency’s lawsuit against Ripple Labs. “These parts of Ripple have been misjudged,” SEC attorneys filed Friday with US District Court Judge Jed Rakoff for the Southern District of New York. The court should not follow them,” he said. said. The SEC’s lawsuit against Ripple Labs led to differences of opinion. As we have reported as Kriptokoin.com, the institution is now considering the appropriate course of action for further investigation.
The particular part of Ripple’s decision that has drawn the ire of the SEC has to do with the classification of “offer” or “programmatic” sales of XRP to third parties. The court’s finding that these sales did not meet the criteria for offering securities raised concerns within the SEC. As a result, the agency’s lawyers are considering filing an appeal. They also plan to recommend such action to the commission.
Pointing to ongoing lawsuit against Terraform Labs CEO
The Ripple decision made by a different judge in the same court has significant weight. It could set a precedent for future lawsuits, including the ongoing civil sanctions lawsuit against Terraform Labs and its former CEO, Do Kwon. Therefore, lawyers representing Terraform and Kwon argue that the Ripple decision weakens the SEC’s case against them. Thus, they have already seized this decision, demanding that the case be dropped.
The SEC’s lawsuit against Terraform and Kwon isn’t just about illegal token sales. It is also alleged outright fraud, a distinction not present in the Ripple case. However, SEC lawyers are focused on overturning the Ripple decision in favor of the defendants and argue that the judge’s reasoning is flawed. According to the SEC’s attorneys, the decision “creates an artificial separation between the expectations of sophisticated institutional and individual investors. It inappropriately turns Howey’s reasonable investor questioning into a subjective one. It also reverses the logic underlying Howey and the other cases.”
What will happen now?
Lawyers also argue that the decision imposes additional requirements for determining when an asset should be considered a security and departs from well-established securities law principles. Moreover, lawyers argue that the Ripple ruling failed to adequately protect individual investors, contrary to the usual practice of courts interpreting federal securities laws to provide greater protection to individual investors.
If the SEC continues with its planned appeal, the case will go to the Second Circuit Court of Appeals. Another layer of complexity will be added to the ongoing legal battle between the SEC and Ripple Labs. The appeal could shape the future of cryptocurrency regulation. For this reason, it has attracted great interest from both industry participants and legal experts. The outcome will be watched closely as it could have far-reaching implications for the broader cryptocurrency market.
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