Ripple's recent partial victory against the SEC, after a legal battle of almost three years, has brought some joy to the crypto industry. However, according to Lawyer Bryan Jacoutot, a legal expert on Twitter, the SEC still has enough grounds to appeal the decision and prolong the legal battle.
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Ripple's win against the SEC may not last long, according to a legal expert. The SEC’s Lawsuit Against Ripple Labs
In December 2020, the SEC filed a lawsuit against Ripple Labs, alleging that the company conducted an unregistered securities offering worth over $1.3 billion through the sale of XRP. The SEC considers XRP to be a security under federal securities laws. However, on June 13, the court ruled that the random "programmatic sale" of XRP to regular investors does not constitute the sale of an unregistered security under Howey. Ripple's win against the SEC may not last long, according to a legal expert.
It is important to note that sales to institutional investors fall under Howey, which is used in the United States to determine whether a transaction qualifies as an investment contract. In this case, the court found that the buyers of XRP couldn't know who was selling them the cryptocurrency, unlike institutional investors who would expect Ripple Labs to use the capital for the betterment of the Ripple ecosystem.
According to Jacoutot, the court's reasoning is weak and Howey was misapplied in the case. The court believed that regular investors bought XRP fully knowing that it is subject to the general cryptocurrency market trends, especially secondary sales of XRP tokens. However, Jacoutot believes that those buying XRP would have also expected to make a profit from the efforts of Ripple Labs.
The attorney argued that the Ethereum Foundation was also involved in the pre-sale of ETH and all participants were aware of this fact. Therefore, if we apply a similar approach to the XRP ruling, it would imply that institutional investors who took part in the ETH pre-sale also purchased unregistered securities.
What Does The Ruling Mean?
The recent ruling on Ripple's case has led to some potential loopholes that could be exploited, as pointed out by Jacoutot. Attorney Joe Carlasare also tweeted that the ruling's logic could be used to launch a pyramid scheme lawfully. However, the ruling has brought relief to Ripple CEO Brad Garlinghouse, who can now promote Ripple's technology without worrying about legal consequences. Despite this win for Ripple, an SEC appeal could prolong the legal battle and cause further uncertainty in the crypto market. Following the ruling, XRP's price has surged by 50% this month and is currently trading at $0.7154.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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