Ripple SEC Case: Ex-SEC Explains Why Secondary Sales Are Not Securities

by

As a seasoned crypto investor with a knack for understanding the intricacies of regulatory battles and market trends, I find myself increasingly optimistic about the future of XRP. The recent developments in the Ripple SEC case, particularly Judge Torres’ ruling that XRP is not a security, have provided a much-needed clarity to an otherwise murky landscape.

Discussion over the SEC’s Wells Notice to NFT marketplace Opensea has sparked debate: Is it necessary for secondary transactions to be considered securities? Judge Torres did not make a ruling on these sales yet, but she suggested that a “programmatic buyer” assumes the same position as a typical secondary market purchaser.

Secondary Market Sales Are Not Securities, Ex-SEC Lawyer Agree

Lawyers contend that the U.S. SEC’s lawsuit against Opensea, claiming NFTs are securities, contradicts recent judgments in cryptocurrency court cases.

According to lawyer Bill Morgan, in the SEC vs. Ripple case, Judge Torres determined that the XRP token, on its own, does not qualify as an investment contract under the Howey test. The judge stated that XRP is not a contract, transaction, or plan that fulfills the criteria for being classified as an investment contract.

Previously employed SEC securities attorney, Marc Fagel, concurred that although Judge Torres didn’t touch upon secondary market transactions, “programmatic sales do seem akin to secondary market transactions”. Additionally, he weighed in on the SEC Commissioners’ votes concerning the Ripple lawsuit remaining private until the entire case is resolved.

Judge Orrick in SEC vs Kraken warned the agency about distinguishing between the nature of the crypto asset itself and sales of the asset. Moreover, in the SEC v Binance lawsuit, Judge Jackson completely dismissed the SEC’s claims that secondary sales of BNB and sales of BUSD are securities.

As an analyst, I perceive OpenSea’s notice as a potential threat to creators and artists, given that Non-Fungible Tokens (NFTs) essentially embody creative assets such as artwork, collectibles, virtual game items, domain names, event tickets, and other unique digital content.

Fagel clarified that secondary sales aren’t precisely considered securities; instead, it remains to be seen if the actions violate Section 5 of the Securities Act. On the other hand, Ripple CLO Stuart Alderoty shares his perspective on why a lawsuit against OpenSea could potentially harm the responsible government agency.

SEC Will Not Appeal Ripple SEC Case

Approximately 40 days remain for the U.S. Securities and Exchange Commission (SEC) to challenge the decision in the remedies ruling. Legal experts predict that the SEC might appeal Judge Torres’ summary judgment on XRP sales, potentially leading to a case at the Second Circuit Court if they proceed with an appeal against the verdict. The regulator faces the possibility of further escalation should they choose to do so.

Previously, the Second Circuit Court decided in favor of Coinbase, stating that transactions involving secondary market cryptocurrency sales are not considered securities. This decision supports Judge Torres’ ruling on the XRP programmatic sales. In response, Paul Grewal, Coinbase’s Chief Legal Officer, shared this significant victory for the crypto industry on his Twitter account.

As a crypto investor, I’m keeping an eye on the ongoing legal battle between Ripple and the Securities and Exchange Commission (SEC). The recent victory of Ripple in the Second Circuit Court could set a significant precedent for other courts, making it less likely for the SEC to appeal the case. This potential binding decision might serve as a deterrent, signaling that the SEC may need to reconsider its approach when dealing with similar cases in the future.

XRP Price Trades Below $0.60

1) Over the past day, XRP‘s price climbed over 1%, now sitting at approximately $0.57. The low and high points for the same timeframe were $0.566 and $0.576 respectively. Moreover, the trading volume has seen a drop of about 40% in the last 24 hours, suggesting reduced engagement from traders.

September could potentially see a bullish trend for XRP, with the possibility of it reaching $0.75 or even $1. This prediction is based on the current state of Ripple’s fundamentals, which are surprisingly robust despite the ongoing uncertainty regarding the appeal of the Ripple case with the SEC. Furthermore, a breakout as large investors (whales) accumulate XRP could generate upward momentum.

According to CoinGlass data, there’s been increased buying activity in total XRP futures contracts. In fact, over the past 24 hours, the open interest for these contracts has risen by 3%, reaching a level of approximately 1.10 billion.

Read More

2024-08-29 20:39