• The former Chief of the U.S. Securities and Exchange Commission’s (SEC) Office of Internet Enforcement says there are problems ahead for Ripple’s historic court ruling.
• Ex-SEC official John Reed Stark references a ruling from SDNY (Southern District of New York) District Judge Jed Rakoff that allowed the SEC to go forward with its case against Terraform Labs and its founder Do Kwon, while also rejecting the distinction made in the Ripple case between public and institutional sales.
• However, Ripple Chief Technical Officer (CTO) David Schwartz has a different take on the matter.
Former SEC Official’s Doubtful Opinion
The former Chief of the U.S. Securities and Exchange Commission’s (SEC) Office of Internet Enforcement says there are problems ahead for Ripple’s historic court ruling. Ex-SEC official John Reed Stark says other courts are already becoming skeptical about the ruling that Ripple’s programmatic sales of XRP don’t qualify as securities transactions.
Judge Rakoff’s Ruling
Stark references a ruling from SDNY (Southern District of New York) District Judge Jed Rakoff that allowed the SEC to go forward with its case against Terraform Labs and its founder Do Kwon, while also rejecting the distinction made in the Ripple case between public and institutional sales. Says Judge Rakoff of the Ripple-SEC lawsuit decision, “The Court rejects the approach recently adopted by another judge of this District in a similar case, SEC v. Ripple Labs Inc., 2023 WL 4507900 (S.D.N.Y. July 13, 2023)…Simply put, secondary-market purchasers had every bit as good a reason to believe that the defendants would take their capital contributions and use it to generate profits on their behalf.“
Stark’s Opinon
In a LinkedIn blog post , Stark reiterates his stance that the XRP decision will be appealed: “But in my honest opinion,the decision resides on shaky ground, will likely be appealed at some point, will likely result in reversal and is not necessarily a cause for celebration.(Please don’t kill the messenger.)“
Schwartz’s Take
However, Ripple Chief Technical Officer (CTO) David Schwartz has a different take on the matter: “This ruling seems to be based no some very unusal properties of this particular scheme and not the way cryptocurrencies generally work.“
Conclusion
It remains unclear whether or not this court decision is set in stone as both sides have contrasting opinions on it; however what is clear is that many more legal battles concerning XRP may arise in future cases involving cryptocurrency transactions .