After the announcement that the US Securities and Exchange Commission (SEC) intends to challenge a federal judge’s ruling regarding the classification of Ripple Labs Inc.’s XRP token, a wave of analysis and debate has surged within the cryptocurrency community. The move has ignited discussions about the intricacies of XRP transactions and the implications of securities law on the crypto market. At the center of the discourse is a tweet by Scott Chamberlain, a prominent former lawyer and vocal supporter of XRP.
Scott Bets On Judge’s Response to SEC Appeal
Providing his opinion of the case in a tweet, Chamberlain predicts that US District Judge Analisa Torres will deny the SEC’s motion for an Interlocutory Appeal. Chamberlain contends that in her initial decision, Judge Torres painstakingly avoided adding novel legal frameworks and instead relied on well-established concepts, particularly the well-known Howey test and its interpretations. He wrote, “My bet: Judge Torres denies the request. She studiously avoided new law.”
Chamberlain’s analysis emerges in response to lawyer James K. Filan’s announcement of the SEC’s appeal. Filan tweeted, “SEC Files Letter outlining its basis for filing a Motion for Leave to File an Interlocutory Appeal regarding “Programmatic” offers and sales to XRP buyers over trading platforms and Ripple’s “Other Distributions.”
Chamberlain also highlights that Judge Torres’ decision hinged on the SEC’s presentation of transaction “buckets” and the subsequent application of the Howey test to these categories. He contends that the SEC’s failure to meet the Howey prongs for two of the three transaction buckets led to the unfavorable outcome, rather than any alleged reinterpretation of legal standards.
Jeremy Hogan also tweeted that he doesn’t believe they would delist as long as they can obtain XRP from the secondary market because only Ripple and other founders are permitted to sell XRP as an investment contract.
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Judge Torres’s Judgement on XRP
Judge Torres’ original ruling acknowledged that sales of XRP to sophisticated investors qualified as investment contracts. However, she deemed programmatic investors, representing the broader public trading XRP on exchanges, to be outside the scope of this classification. She reasoned that the latter group lacked the same comprehension of speculative value propositions and potential profits, Bloomberg reported.
The SEC’s decision to challenge Judge Torres’ ruling reflects its commitment to clarifying the regulatory status of cryptocurrencies like XRP. The upcoming appeal could significantly impact the legal framework governing digital assets and may set a precedent for similar token classification cases. Amidst the chaos, XRP price is currently trading at $0.6266, with a more than 2% decrease from the last day.
