The United States SEC has indicated its potential appeal in the recent ruling on the case against Ripple Labs. The ruling stated that XRP should not be considered a security when sold to retail investors. This development was mentioned in court documents where the SEC expressed its intention to explore further avenues for review.
SEC Argues Against the Ruling
The SEC’s argument revolves around the violation of fundamental securities laws principles, particularly the Howey test, which determines whether an investment contract exists. This recent comment from the SEC was made during a separate lawsuit involving Terraform Labs and its founder, Do Kwon. The lawsuit accuses them of orchestrating a multi-billion dollar crypto asset securities fraud.
Ripple Labs Ruling’s Impact on the Terraform Labs Lawsuit
In response to Terraform Labs’ motion to dismiss, the SEC cited the Ripple Labs ruling. They highlighted several issues it holds against the court’s decision on XRP. While the SEC acknowledges that some parts of the Ripple ruling align with their claims in the current case, they argue that certain aspects of the ruling add baseless requirements to the Howey test and its principles.
As a result, the SEC is considering pursuing further review and intends to recommend the same to the commission.
Gary Gensler’s Disappointment Over XRP Ruling
SEC Chair Gary Gensler recently expressed his disappointment regarding the court’s decision to categorize XRP as non-security for retail investors. During an interview with Yahoo Finance, Gensler conveyed the SEC’s contentment with the court’s recognition of XRP as a security for institutional investors.
However, he expressed concern over the aspect related to retail investors and mentioned ongoing consideration of this matter.
On the same day, Gensler spoke about artificial intelligence at the National Press Club. He was also questioned about the urgency of establishing clear regulations for the crypto industry in light of recent court rulings. Gensler refrained from providing a specific answer to the question, leaving the matter open for further evaluation.
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