In the ongoing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), the recent court decision in the SEC v. Coinbase lawsuit has introduced more uncertainty. The rejection of Coinbase’s argument by Judge Failla has raised concerns about the SEC’s case against Ripple.
Coinbase had cited the Ripple verdict as part of its attempt to dismiss the SEC lawsuit. The verdict stated that XRP sold on digital exchanges did not qualify as investment contracts due to the blind bid/ask transactions. However, Judge Failla rejected this argument, siding with the SEC.
This victory for the SEC has prompted speculation from Charles Gasparino, a senior correspondent at Fox Business. Gasparino suggests that Judge Failla’s decision serves as a warning to XRP holders, indicating that a higher court could reverse Ripple’s victory. He points out that Judge Failla relied on Judge Rakoff’s reasoning in the SEC case against TerraForm Labs, who also rejected Judge Torres’ reasoning regarding Ripple’s programmatic sales of XRP.
Gasparino had previously speculated that the appellate court would overturn Ripple’s win, arguing that Judge Torres’ decision implies that XRP is both a security and a non-security.
However, industry commentators, including Seedstarter founder Jesse Hynes, have dismissed Gasparino’s opinion. They argue that applying a ruling issued on a motion to dismiss, like Coinbase’s, to a summary judgment decision in the Ripple case is not valid.
The SEC has yet to decide whether it will challenge Judge Torres’ decision after the remedies phase. Last year, Judge Torres denied the SEC’s motion to appeal her decision on Ripple’s programmatic sales and other distributions of XRP. The SEC will wait until all pending issues are resolved at the district court level before filing a full appeal.
Once the court issues the final decision, the SEC will determine whether to challenge the ruling on programmatic sales and other distributions. However, the SEC risks establishing the Ripple verdict as a legal precedent for the broader crypto market if the Second Circuit affirms Judge Torres’ decision.
It is important to note that this article is for informational purposes only and should not be considered financial advice. The views expressed in this article are the author’s personal opinions and do not reflect those of The Crypto Basic. Readers are advised to conduct their own research before making any investment decisions. The Crypto Basic is not liable for any financial losses incurred.
