The US District Judge Analusa Torres recently ruled that Ripple’s XRP was not violating any federal securities law by getting listed on public exchanges. However, the US Securities & Exchange Commission, that is, the SEC, has taken cognizance of this outcome and sought to draft an appeal for this decision. Per the statement, XRP qualifies as a security, and it has all the right to regulate the token.
What makes this case and its appeal crucial is the fact that it potentially creates a substantial ground for differences of opinion. Also, it could have a large impact on other lawsuits that the SEC has brought under the radar.
The current decision was delivered on July 13, 2023, and it could now soon go under federal appeals court review. The SEC weighs heavily on the appeal as it could address all the necessary legal issues. The SEC continues to claim that XRP and other similar tokens are securities just like stocks and bonds, adding that it has power over them when it comes to regulations.
Ripple and the SEC have been in a legal battle since December 2020. Allegations are that Ripple raised over $1.3 billion by issuing securities that were never registered with the authorities. This pertains to listing its native token – XRP – on public exchanges. Ripple has defended its actions by stating that it is a valid offering as holders of XRP had no reasonable expectations of profit.
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The US District Judge Jed Rakoff rules in another direction altogether by stating that TerraUSD qualifies as a security since it is being sold on a public exchange. TerraUSD is offered by Terraform Labs, and this particular verdict changes the course of what Torres stated in their judgment.
It is up to Torres to decide if the SEC should appeal and if the case should be put on hold.
Gary Gensler, the Chair at the SEC, has published a hundred enforcement actions related to cryptocurrencies. Most of them have already been settled; however, some of them are going to court for more clarification. Ripple and Terraform are likely to go through a legal battle for a longer time. The community is in splits if the verdict will affect Coinbase.
Per what has been stated in media reports, the chances of that incident happening are slim since the case is somewhat different. Coinbase is accused of operating as an exchange platform without registering itself as an exchange platform. Binance is also under the radar of the SEC.
Coinbase and Binance might be fighting a different battle. It could still be assumed that a verdict delivered for digital assets could have a slight, if not entire, impact on their legal course.
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The entire legal groundwork is based on the SEC’s idea that the legal implications could pose a significant ground for differences of opinion. The SEC is ultimately looking to oversee the functioning of the crypto market.
