- A recent court ruling contradicts a previous decision in the Ripple-SEC case, stating that secondary market sales of XRP are not investment contracts.
- Judge Jed Rakoff, presiding over the SEC’s case against Terraform Labs and Do Kwon, disagreed with the Ripple case judge Analisa Torres and ruled in favor of the SEC’s claim that Terra LUNA was sold without registration.
- The SEC plans to appeal the Ripple decision, according to court documents.
In a recent development in cryptocurrency regulation, a judge has contradicted a previous ruling in the Ripple-SEC case, stating that secondary market sales of XRP are indeed investment contracts. This decision, made by Judge Jed Rakoff in the SEC’s case against Terraform Labs and Do Kwon, could have significant implications for the cryptocurrency industry.
Disagreement Over Secondary Market Sales
Judge Rakoff made it clear that he does not distinguish between corporate and secondary market sales, a stance that contrasts with that of Judge Torres in the Ripple case. He argued that there are many reasons why secondary market buyers might believe that project developers would profit more, and that these profits would in turn benefit them. The defense had praised the profitability of the token to both investor groups, promising that revenues from token sales would be reinvested into the Terra blockchain, leading to further profits.
The Ripple-SEC Case: A Controversial Precedent
The ruling by Judge Rakoff, who is presiding over the Terraform Labs-SEC case, will not directly affect the Ripple-SEC case. However, it does highlight the interpretive nature of these issues and the potential for change. The Ripple-SEC case set a controversial precedent by ruling that secondary market sales of XRP were not investment contracts, a decision that has now been challenged by Judge Rakoff’s ruling.
SEC Plans to Appeal Ripple Decision
Another significant piece of information from the court documents is the SEC’s intention to appeal the Ripple decision. The SEC had previously cited the Ripple decision as a precedent to Judge Rakoff, advising him not to follow it. This suggests that the SEC is not satisfied with the Ripple decision and is prepared to challenge it in court.
Conclusion
The recent ruling by Judge Rakoff in the Terraform Labs-SEC case could have far-reaching implications for the cryptocurrency industry. By challenging the precedent set by the Ripple-SEC case, this decision opens up the possibility of further legal disputes over the classification of cryptocurrency sales. As the SEC prepares to appeal the Ripple decision, the industry will be watching closely to see how these legal battles unfold.
