The Securities and Exchange Commission (SEC) is planning to move to court to challenge the ruling that granted Ripple Labs a partial win against the agency. The SEC has reportedly written to a judge in Manhattan to allow the federal court of appeal to examine the ruling, which was made in July.
On July 13, US District Judge Analisa Torres ruled that the sale of Ripple’s cryptocurrency XRP on public exchange did not amount to a violation of the securities regulations. The decision was against the SEC’s argument that the blockchain payments platform sold unregistered securities to the public.
Ripple’s Win against SEC
In her ruling, Torres explained that Ripple did not violate the securities law because the purchasers of XRP did not expect to make a profit based on Ripple’s efforts. However, the judge said that Ripple could have violated the law by offering the cryptocurrency to institutional investors. The judge must decide whether to allow the appeal to continue and put the case on hold.
According to a report by Reuters, the SEC said in the letter that the appeal would address what it described as substantial grounds for a difference of opinion. The ruling came as a setback for the SEC, which has for a long time termed cryptocurrencies as securities, similar to stocks and bonds, which must be brought under its purview.
Change of Stance?
However, in a separate report by CNBC, a judge in the same federal court that handed Ripple the partial victory, issued a contravening opinion that cryptocurrencies are considered securities regardless of the context in which they are sold. The opinion by Judge Jed Rakoff gave the SEC the green light to pursue its lawsuit against Terraform Labs and its Founder Do Kwon.
However, the opinion reportedly complicates the legal tussle between the agency and Ripple, and several other pending cases pitting the SEC and crypto companies. In June, the regulator sued Coinbase for allegedly issuing unregistered securities and operating an illegal trading platform. However, the exchange has disputed the claims, saying the regulator has no jurisdiction over cryptocurrencies.
This article was written by Jared Kirui at www.financemagnates.com.
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