simply put
The U.S. Securities and Exchange Commission (SEC) has pledged to appeal a recent ruling that Ripple’s XRP sales did not violate securities laws, claiming the judge made a mistake.
Terraform Labs co-founder Do Kwon is facing SEC fraud charges and is seeking to use the Ripple ruling to defend himself.
Despite falling 2.3% on the day, XRP has maintained most of its gains from the ruling, rising 66% over the past two weeks.
The U.S. Securities and Exchange Commission (SEC), still stung by a legal defeat earlier this month, has vowed to appeal the decision, claiming the judge made a mistake. The reaction from the cryptocurrency community and legal experts has been fierce.
On July 21, the SEC said it would appeal the decision of U.S. District Judge Analisa Torres in its ongoing battle with Ripple Labs.
SEC strikes back
The ruling that Ripple did not violate securities laws by selling XRP to investors offers hope to other companies in the crypto industry. It also offers hope to other defendants facing SEC lawsuits for allegedly selling securities.
One of the defendants is Terraform Labs co-founder Do Kwon, who is currently serving a prison sentence. According to the Wall Street Journal, Kwon is trying to use Ripple’s results against regulators, who are accusing him of fraud.
The SEC said the judge presiding over the case should not look to the Ripple ruling for guidance. Judge Torres’ decision “adds unwarranted requirements” to the test for determining whether an asset is a security, adding that it will conduct “further review.”
Still, SEC lawyers looked back to legislation from 90 years ago, saying the reasoning “cannot possibly be reconciled with all of these fundamental securities law principles.”
“SEC staff is considering various available avenues for further review and intends to recommend that the SEC seek such a review.”
Coinbase Chief Legal Officer Paul Grewal responded on July 22:
"It would be nice if the Commission had cited just one case, in which the level of 'Howey-ness' required varied according to the sophistication of the investors involved. Clearly, they have failed to do so and are once again placing policy above the law."
Mark Cuban followed up by saying that the SEC also labeled every buyer as an “investor.” He added that this was not the case and Ripple had made that clear. “Securities have a purpose, and that is to be a security. For a DeFi or CEX buyer, it is impossible to know why the buyer bought.”
“A hammer can only see the nail,” Grewal concluded.
XRP Price Outlook
Ripple’s price is down 2.3% on the day. As a result, XRP has fallen back to $0.774 at the time of writing.
Additionally, the cross-border payments token is down 8% since its 2023 high set on July 20. Despite this, XRP has managed to retain most of its gains from the ruling, gaining 66% over the past two weeks.