The US Securities and Exchange Commission has proposed an appeal against a recent ruling on the Ripple Labs lawsuit, which ruled XRP not considered a security when sold to retail investors.
The SEC says the ruling violates “fundamental securities laws,” such as the Howey test, which determines what qualifies as an investment contract.
Do we really want to ask a judge this: Will my strict application of the Howe test in this case result in a 2023 result consistent with the policy implications behind the 1934 statute? https://t.co/acMNRc00B6
— John E Deaton (@johndeaton1) 22 July 2023
The SEC’s latest comments on the Ripple Labs lawsuit were made in a separate lawsuit against TerraForm Labs and its founder, Do Kwon, for allegedly “scheming fraud involving multibillion-dollar crypto assets.”
According to the SEC’s July 21 response to Terraform Labs’ motion to dismiss — which referenced a potentially precedent-setting Ripple Labs decision by the defendants — the SEC highlighted several issues against the court’s recent ruling on XRP.
“Contrary to Defendants’ allegations, the majority of Ripple’s ruling supports the SEC’s allegations in this matter and rejects the arguments made by Defendants here. However, with respect to programmatic and other sales, the SEC respectfully alleges that Ripple is infringing and adding baseless requirements to Howe and his offspring,” the SEC said, adding:
“With all due respect, those parts of Ripple have been misconstrued and this court should not follow them. SEC staff is considering the various avenues available for further review and intends to recommend that the SEC conduct such review.
Connected: XRP price is looking for another bullish catalyst to trigger a move above $1
The SEC’s statements come just days after SEC Chairman Gary Gensler expressed his dismay at the court ruling that XRP is not a security when sold to retail investors.
“We are glad that the court has ruled […] Token is a security for institutional investors […] There was disappointment in another aspect regarding retail investors. We’re still looking at it and considering it,” Gensler said in an interview with Yahoo Finance on July 17.
That same day, Gensler also appeared at the National Press Club to give a speech on artificial intelligence, and was asked whether the court’s ruling represented an urgent need to establish clear regulation for the industry.
However, Gensler did not give a specific answer to this.
The SEC that claims a court failed to follow Howe is rich… On its website, the SEC acknowledges that Fed courts require parity and then says it doesn’t require parity in its analysis or considers parity a separate part of Howe. If the sec… https://t.co/CX6Kwfh3cJ
— exlawyer.eth/tez (@exlawyernft) 22 July 2023
magazine: Crypto Regulation – Does SEC Chairman Gary Gensler Have the Last Word?
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