Ripple Faces Renewed Challenge from SEC Appeal
Ripple Labs is once again at the forefront of legal confrontations as the U.S. Securities and Exchange Commission (SEC) has filed an appeal against a recent court ruling. On October 2, 2024, the SEC escalated the ongoing legal contention with Ripple by officially lodging an appeal. This development signifies a new chapter in the long-standing and contentious dispute between the federal agency and the cryptocurrency company.
Understanding the Court’s Recent Decision
In a pivotal decision, Judge Analisa Torres ruled that Ripple’s programmatic sales of XRP to retail investors did not breach securities laws. However, the court found that some direct sales to institutional investors, amounting to $728 million, were indeed unregistered securities sales. This mixed verdict has been perceived as a partial victory for Ripple, hinting that tokens might not be classified as securities when transacted on open markets.
The SEC’s Challenge: A Focus on XRP’s Classification
Despite the partial win for Ripple, the SEC is contesting the ruling, particularly in terms of XRP’s classification. The agency contends that the decision undermines established legal precedents and violates the Howey test, a critical framework used to determine if a financial transaction qualifies as an investment contract.
A Crucial Time for the Cryptocurrency Sector
This ruling emerges at a significant moment, coinciding with Bitwise’s submission of an initial registration statement to the SEC, signifying its intention to launch an XRP exchange-traded fund (ETF). Industry experts, such as Alex Thorn from Galaxy Digital, have shared insights on the potential success of the ETF. Thorn expressed that the likelihood of this ETF filing being successful would “drop to near zero if they appeal.”
Expert Opinions: The Future of XRP and ETFs
Bloomberg’s Senior ETF Analyst echoed Thorn’s sentiment, acknowledging that the prospects are “near zero if Harris wins.” However, they also noted that a political shift, such as a Trump victory, could alter the landscape, making various outcomes possible in this arena. Thorn further remarked that if the SEC does appeal yet Harris wins, there might be a chance that “the SEC could eventually withdraw the appeal.”
