News of Ripple’s recent partial victory against the Securities and Exchange Commission after a nearly three-year legal battle has sent a wave of joy around the entire cryptocurrency industry. but, according For Twitter legal expert Brian Jakotot, the victory may be short-lived as the SEC has ample grounds to appeal the decision and hold this matter a while longer.
Securities and Exchange Commission lawsuit against Ripple Labs
The Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs in December 2020, alleging that Ripple conducted over $1.3 billion worth of unregistered securities through the sale of XRP. According to the Securities and Exchange Commission, XRP is a security under federal securities laws. But the court decided on June 13 that the random “automated sale” of XRP to ordinary investors did not constitute the sale of an unregistered security under Howey.
However, sales to institutional investors fall under Howey’s, which is used in the United States to determine whether a transaction qualifies as an investment contract. In this case, the court found, unlike institutional investors who expect Ripple Labs to use the capital to improve the Ripple ecosystem, buyers cannot know who is selling them XRP.
According to Jacquotot, the court’s reasoning is weak and Howey misapplied it in the case. The court concluded that ordinary investors bought XRP knowing full well that it was subject to general cryptocurrency market trends, especially secondary sales of XRP tokens. However, Jacoutot believes that those buying XRP were also expecting to make a profit from Ripple Labs’ efforts.
XRP price at $0.7254 | Source: XRPUSD on Tradingview.com
The lawyer also made a issue to the Ethereum Foundation, as everyone who participated in the pre-sale of ETH knew they were buying from the Ethereum Foundation. Looking at the XRP verdict in a similar way, this means that institutional investors in pre-sales of ETH have also bought unregistered securities.
What does judgment mean?
According to Jacquot, the ruling opens up some loopholes that could be exploited. in tweet By Attorney Joe Karlassar on Twitter, he explains that the ruling’s reasoning leaves an opening that can be used to legally launch a pyramid scheme. In this case, the profits of “programmed sales” can be distributed to individual investors to institutional investors.
Ripple CEO Brad Garlinghouse has He said The ruling provided relief and that the company can now promote various use cases for Ripple and its technology without worrying about legal repercussions.
This is certainly a win for Ripple, but the SEC’s order could drag out the legal battle for years and create another round of great uncertainty in the cryptocurrency market.
XRP price skyrocketed after the ruling. It has now gained 50% this month and is currently trading at $0.7154.
Featured image by Bit2Me Academy, chart from Tradingview.com
