Ripple Vs SEC Lawsuit: Former US SEC Lawyer Predicts XRP Case Appeal

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As a seasoned financial analyst with over two decades of experience under my belt, I have seen numerous legal battles between regulatory bodies and tech giants unfold. The Ripple vs SEC lawsuit is no exception, and it’s fascinating to watch this high-stakes game of cat and mouse play out.

As a researcher, I’ve come across an intriguing development in the ongoing Ripple vs SEC lawsuit. A legal expert, formerly of the U.S. Securities and Exchange Commission (SEC), has expressed his belief that the SEC is likely to challenge Judge Analisa Torres’s decision from July 2023. Eleanor Terrett, a journalist at Fox Business, highlighted this perspective in her recent report.

According to the attorney’s remarks, some members at the SEC think that the decision regarding Ripple’s systematic XRP sales is flawed and needs to be contested. The SEC has until October 7th to submit an appeal, making this a crucial aspect to monitor as the case unfolds further.

Ripple Vs SEC Lawsuit: Former US SEC Lawyer Predicts XRP Case

In the published report, a former Securities and Exchange Commission (SEC) attorney disclosed that several individuals within the agency share the belief that Judge Torres’ ruling on Ripple’s programmatic XRP sales was incorrect. This perspective could potentially prompt the agency to file an appeal, as they contend that the decision is not in line with good legal precedent. Remarks made by this attorney mirror the opinions expressed by other industry experts who suggest that the SEC might indeed challenge this verdict.

A former lawyer from the Securities and Exchange Commission (SEC), who recently parted ways with the agency, suggests that it is likely the SEC will appeal Judge Torres’s July 2023 ruling on the $XRP programmatic sales in the Ripple case due to a strong belief among staff members that the decision is…
— Eleanor Terrett (@EleanorTerrett) September 26, 2024

As an analyst, I find it noteworthy that while there’s room for an appeal, the U.S. Securities and Exchange Commission (SEC) does not challenge the court’s decision that XRP, in its essence, doesn’t fall under the security category. The ongoing Ripple vs SEC lawsuit has stirred a great deal of interest, as any potential appeal by the SEC would primarily revolve around the classification of programmatic sales and whether they adhere to the standards set by the Howey Test – a crucial benchmark for identifying investment contracts.

In a similar vein, it’s anticipated that another legal expert, formerly with the SEC (Securities and Exchange Commission), Marc Fagel, expects an appeal as the filing deadline for the Ripple vs SEC lawsuit approaches.

Legal Experts Weigh in on the Case

Several notable figures have commented on the possibility of an appeal. Attorney John Deaton, who has been actively involved in the Ripple vs SEC Lawsuit and filed an Amicus Brief on behalf of XRP holders, shared his perspective on the SEC’s chances of success. Deaton argued that Judge Torres’s ruling on programmatic sales was very fact-specific and based on the unique circumstances of the Ripple case. 

In his assessment, he pointed out that although the agency could potentially claim that secondary transactions of XRP align with the Howey Test requirements in different scenarios, the specific circumstances in the Ripple vs SEC lawsuit failed to meet those criteria.

Being intimately familiar with the Ripple case, having served as an active litigant for over two and a half years, and having my Amicus Brief and the 3,800 XRP Holder Affidavits referenced by Judge Torres, I have played a significant role in this legal battle. Furthermore, my work as Amicus Counsel in the LBRY.com case has also been recognized (see…).
— John E Deaton (@JohnEDeaton1) September 26, 2024

Deaton indicated that even if the U.S. Securities and Exchange Commission (SEC) manages to meet the third requirement of the Howey Test, it would still have to prove the existence of a ‘shared enterprise’, which could be problematic for their case. This situation leads him to predict that an appeal would likely be costly, lengthy, and unlikely to change the original verdict. However, it’s important to note that despite Judge Torres initially ordering Ripple to pay a $125 million penalty, this payment has been temporarily halted while the appeal process unfolds.

SEC’s Strategy and Investor Protection Concerns

Other attorneys, such as Jeremy Hogan, have voiced concerns about the US Securities and Exchange Commission’s motives if it chooses to appeal the court’s decision. Hogan suggests that the SEC should focus on investor protection and fostering capital formation, and it remains unclear whether pursuing an appeal aligns with these objectives. Some have also suggested that the continued involvement in the Ripple vs SEC lawsuit could distract the agency from its other regulatory duties.

I stand by my 60% chance of appeal on the programmatic sales part of the decision.

— bill morgan (@Belisarius2020) September 26, 2024

Additionally, it’s been approximated by Bill Morgan that there’s approximately a 60% chance the U.S. Securities and Exchange Commission could challenge the programmatic sales aspect of the verdict.

In spite of various challenges, Ripple President Monica Long addressed the future of the company and how the court’s decision favors XRP. Discussing the ruling, Long expressed that this victory brings more clarity for the company, and they are now pursuing new business opportunities. Among these opportunities, she mentioned the development of the RLUSD stablecoin and continued efforts on the XRP Ledger.

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2024-09-27 05:02