Former SEC Lawyer Reveals Commission Could Appeal Ripple (XRP) Case: Expert Thoughts

by

As an analyst with over two decades of experience in financial markets and regulatory compliance, I have witnessed numerous legal battles between financial institutions and regulatory bodies, including the SEC. The Ripple case has been a fascinating spectacle to observe due to its implications on the broader crypto industry.

A former SEC attorney has stated that the Securities and Exchange Commission (SEC) may decide to challenge the court ruling in the Ripple case, as reported by Eleanor Terrett of Fox Business.

In a blog post dated X, written by Eleanor Terrett, it was disclosed that an attorney, who had recently departed from the commission, indicated their belief that the agency might choose to challenge Judge Torres’ decision made in July 2023.

The decision made by Judge Torres in July 2023 classified XRP as not being securities. This verdict brought relief to Ripple, who have been dealing with SEC regulations for years. However, sources indicate that the SEC is displeased with this ruling and may consider appealing it, as they believe it was an incorrect decision. The current price of XRP stands at $0.59, with a 24-hour volatility of -0.3%. Its market cap is $33.19 billion, with a 24-hour volume of $1.36 billion.

A former attorney from the Securities and Exchange Commission (SEC), who has recently departed, shares with me that it’s likely the SEC will appeal Judge Torres’s July 2023 ruling regarding the $XRP sales in the Ripple case for this reason: “The general consensus among them [at the SEC] is that the decision is…
— Eleanor Terrett (@EleanorTerrett) September 26, 2024

Experts Believe SEC’s Appeal Unlikely to Succeed

In contrast, John Deaton – the leading attorney and GOP candidate for the U.S. Senate in Massachusetts – expressed his views on the case, suggesting that an appeal by the SEC would be frivolous spending of taxpayer dollars, as they would likely suffer another defeat if they chose to appeal. Deaton, who has been actively involved in the SEC vs. Ripple legal battles and has worked on them for over two and a half years, is confident that the appellate court will affirm Judge Torres’ decision concerning the third prong of the test.

He noted that the Judge made her decision based on fact. While the SEC decided not to rely on expert testimony relating to XRP holders, the Judge instead used the written statement by XRP holder submitted by Deaton. He said:

I think it’s unlikely that an appellate court will overturn Judge Torres’ decision based on the third prong. Her ruling was highly dependent on the specific details of the case. The SEC didn’t use any expert testimony concerning XRP holders, and in fact, this type of testimony was excluded. However, Judge Torres did take into account the affidavits I submitted from XRP holders.

In summary, it was pointed out that certain situations might classify secondary sales as investment contracts, but only if all the Howey factors apply. However, these specific circumstances do not align with Ripple’s case. If an appeal occurs, it is expected that the appellate court will uphold Judge Torres’ decision.

Potential Impact on XRP and Broader Crypto Industry

Moreover, prominent attorney Jeremy Hogan expressed his thoughts on the case, stating that the Securities and Exchange Commission believes the judgment is incorrect since they are on the losing end. Instead of concentrating on contesting the verdict, it might be more prudent for the SEC to assess whether challenging this decision aligns with their mandate to safeguard investors and foster capital development.

If the SEC chooses to challenge the ruling, it might have implications for the XRP token and the broader cryptocurrency sector. This situation could intensify the demand for clearer regulations concerning the classification of digital currencies. The SEC has until October 7th to submit an appeal.

Read More

2024-09-27 16:48