The legal tussle between Ripple and the U.S. Securities and Exchange Commission (SEC) intensifies as the SEC seeks to appeal a recent favorable ruling for Ripple concerning the sale of XRP. This development poses crucial questions for the future of XRP and its standing in the eyes of the law.
The ongoing legal saga between Ripple and the U.S. Securities and Exchange Commission (SEC) has taken a new turn. Last week, the SEC moved to appeal a federal judge’s decision concerning the sale of XRP through exchanges and their potential breach of securities law. The day after this verdict was issued, the SEC was allowed to present its stance on the matter.
Did Ripple Win the SEC?
Judge Analisa Torres of the U.S. District Court for the Southern District of New York recently ruled in Ripple’s favor, indicating that Ripple’s programmatic sales of XRP did not breach securities regulations. The reasoning was grounded in the notion that ordinary retail investors procuring XRP on exchanges wouldn’t have expectations similar to institutional investors acquiring XRP directly from Ripple.
Why did the SEC Appeal the Decision?
The SEC’s appeal aims to challenge certain rulings made based on undisputed facts, particularly legal determinations about investment contracts. As stated in the SEC’s filing, these determinations pose a significant legal question: “Can an issuer’s offers and sales on crypto asset trading platforms lead to a reasonable expectation of profits driven by the efforts of others?” This query is pertinent in several ongoing legal cases, and a verdict by the Second Circuit could set a crucial precedent.
This potential for precedent carries weight, with the SEC alluding to its other ongoing lawsuits, including ones against Coinbase and Dragonchain. They believe that the outcome of the Ripple case could significantly influence these other legal proceedings.
Will Ripple Win Again?
While the SEC’s appeal is based primarily on the sales mechanism of XRP, it does not fundamentally challenge the nature of the asset itself. In their filing, the SEC clearly stated that their contention does not involve branding the underlying asset – the XRP – as a security. They emphasized that they do not consider these digital assets, which are essentially lines of computer code, to inherently represent a security.
Now, the ball is in Ripple’s court. They have a deadline until Sept. 1, 2023, to respond to the SEC’s motion. Once Ripple responds, the SEC will have an additional week to counter-reply. If Judge Torres approves the SEC’s appeal, the next step would involve the SEC petitioning the Second Circuit Court of Appeals to review the case.
XRP Price Analysis: Why is XRP Price Down?
The price trajectory of XRP has recently been on a downward spiral, facing a confluence of multiple pressures. A notable surge in XRP price to $0.95 became a catalyst for short-term traders to liquidate their holdings, realizing profits and adding to the selling pressure. Compounding this, the U.S. Securities and Exchange Commission’s decision to appeal the recent judgment concerning Ripple further dampened the mood, introducing a fresh wave of uncertainty among XRP investors.
This legal upheaval coincided with an already bearish cryptocurrency market that witnessed a significant crash. Currently, XRP stands at $0.54, marking a 24-hour rebound of 7%, as it managed to find solid ground with strong support near the $0.45 mark.