The SEC uses a California judge’s Ripple ruling as supplemental authority in its lawsuit against Binance, highlighting legal contrasts.
Judge Hamilton’s decision on XRP as securities conflicts with an SDNY ruling, fueling debate within the XRP community.
The SEC’s strategy could impact the Binance lawsuit, focusing on misleading statements by Ripple’s CEO about XRP sales.
As per John Morgan, a cryptocurrency analyst on X platform, the action against Binance by the U.S. Securities and Exchange Commission (SEC) is taking advantage of a verdict in the Ripple XRP case. In contrast to a Southern District of New York (SDNY) judge’s ruling regarding XRP’s security status, the SEC has highlighted the legal opinion of a California district court judge.
Breaking: US SEC Leverages Ripple XRP Case in Binance Lawsuithttps://t.co/pKpRGIzVT7
— John Morgan (@johnmorganFL) June 22, 2024
SEC Files Ripple Lawsuit as Supplemental Authority
The SEC included the Ripple class action lawsuit as an additional source of authority in its litigation against Binance, Binance.US, and former CEO Changpeng Zhao, which it filed with the District Court of Columbia. The SEC contends that its litigation against Binance is pertinent to the ruling rendered by the California judge in the Ripple case. With the majority of the discovery disagreements settled, this action is taken as the Binance case approaches the conclusion of its discovery and deposition phase.
The court is now seeking rulings on several motions, including a joint motion to dismiss the lawsuit. In the Ripple Labs, Inc. Litigation, Judge Hamilton ruled in favour of Ripple, dismissing most securities violation arguments. However, a trial will proceed on misleading statements made by Ripple CEO Brad Garlinghouse about XRP sales.
Ripple CEO’s Stance on Misleading Statements
Ripple CEO Brad Garlinghouse commented on the case, asserting that he stands by his statements and looks forward to clarifying them during the trial. He noted that the sole plaintiff, who owns a few hundred XRP, did not buy it directly from Ripple and might not have heard the statements before trading.
SEC Highlights Judge Hamilton’s Opinion
Judge Hamilton’s ruling contradicts the SDNY court’s decision that XRP programmatic sales are not securities, sparking debate within the XRP community. The judge’s ruling on the third prong of the Howey test was objective, stating that programmatic buyers might have purchased XRP expecting profits from Ripple’s efforts.
The SEC also wants the court to consider Ripple CEO’s misleading statements about XRP. This poses a concern for Ripple as the SEC may use this California case in the Second Circuit to appeal Judge Torres’ summary judgment on XRP. However, the court must first decide if XRP sales qualify as securities.
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