- SEC reignited legal tensions with Ripple Labs over XRP’s classification
- XRP surges by 9.21%, reflecting resilience despite ongoing regulatory scrutiny by the SEC
The ongoing lawsuit between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has shifted directions, following the SEC’s official filing of an appeal on a crucial decision made in July 2023.
In a first ruling, Judge Analisa Torres distinguished between XRP sales, stating that transactions made on exchanges did not qualify as securities. However, she categorized sales directed towards institutional investors as securities.
Although Ripple was mandated to pay a fine of $125 million due to its institutional XRP sales, the Securities and Exchange Commission (SEC) is currently challenging the court’s decision regarding secondary market transaction activities involving XRP.
Through the application of the Howey Test, the regulatory body claims that Ripple’s marketing efforts led investors to anticipate profits, which classifies XRP as an investment agreement in the eyes of the SEC.
What’s the reason behind the appeal?
The SEC stated that investors are more concerned about what an issuer does, rather than who sells it to them. They pointed out that Ripple’s distribution of XRP, which includes transactions like employee compensation and business rewards, falls within the category of “investing money” according to the Howey test.
It’s intriguing how the sequence of events unfolds. Given that shifts in the SEC’s leadership are imminent, it’s surprising that the regulatory body has maintained its stance, steadfastly declining to postpone this case, as underscored by Ripple’s Chief Legal Officer Stuart Alderoty.
Ripple Labs criticizes SEC
Just as anticipated, the heads at Ripple haven’t hesitated to voice their disapproval towards the SEC’s choice to challenge the court’s recent defeat through an appeal.
More recently, Alderoty criticized the action as unnecessary spending of public funds, indicating an increasing irritation at the regulator’s persistent pursuit of enforcement measures.
He said,
On January 20th, the battle between Gensler and cryptocurrency at the SEC comes to an end. We requested the SEC to delay the submission of their opening brief in their appeal against our win (deadline was Jan 15), but they declined. It seems like a squandered effort and unnecessary expenditure of taxpayer funds.
Will Trump help cool down the SEC vs Ripple legal war?
This occurred as high-ranking Republicans at the Securities and Exchange Commission (SEC) were gearing up to restructure their regulatory strategy towards cryptocurrencies, which could signify a major policy change in this area.
Based on reports, Commissioners Hester Peirce and Mark Uyeda are examining potential measures for establishing more transparent rules regarding the classification of cryptocurrencies as securities. Furthermore, they are contemplating an evaluation of existing crypto regulatory cases.
As Paul Atkins prepares to assume the role of chairman under President Donald Trump, there’s a rising sense of expectation that the tough regulatory approach set by Gary Gensler could soften in the near future.
As a crypto investor, I can’t help but keep an eye on the ongoing developments. Atkins’ Senate confirmation plays a crucial role in shaping the timeline for these anticipated changes. It’s like waiting for the final piece of a puzzle to fall into place.
XRP’s price action
In spite of ongoing attempts by the SEC to reverse earlier decisions, the market value of XRP has shown remarkable strength. As reported by CoinMarketCap, XRP was currently trading at $3.08, representing a 9.21% increase over the past day.
Indeed, an increase in prices was noticed, and this happened as the agency submitted their ‘Pre-Argument Statement for a Civil Appeal’ on October 17th – Indicating their strong will to pursue their legal struggle.
Despite some temporary ups and downs in the value of the XRP token due to recent events, overall, the general feeling about XRP within the market has stayed positive.
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2025-01-16 17:31