The recent Ripple court victory over the Securities and Exchange Commission (SEC) might face new challenges soon as the regulatory watchdog is expected to appeal the ruling on XRP programmatic sales issued in July 2023. The XRP community has been filled with celebration over the recent ruling that ordered Ripple to pay a civil penalty of $125 million for violating securities laws.
Following the decision, the price of XRP skyrocketed by over 25%, shooting its value above the crucial $0.6 mark. However, the celebration might be cut short if the SEC moves on to appeal to classify XRP secondary sales as securities.
SEC Expected to Appeal Court Decision
Eleanor Terrett, a prominent Fox Business Journalist, shed some light on the latest court decision in a lengthy post on X (formerly Twitter). According to her, a spokesperson of the SEC commented on the ruling stating that the court found that Ripple may likely (if it has not already) violate laws in the future as the blockchain firm has shown a willingness to push the boundaries of the court order.
Also, he emphasized that the court recognized the outrageousness of Ripple’s conduct and pointed out that a recurrent and highly lucrative violation of Section 5 of the Securities Act is a serious offense. He noted that several courts has declared that “the securities laws apply when firms offer and sell investment contracts, regardless of the technology or labels that they use.”
Based on this, Terret said that even though the SEC is celebrating because the Judge agreed that the firm had violated federal securities law and that Ripple will have to pay twelve times more than the $10 million it suggested, the regulatory commission might appeal the July 2023 ruling that declared the Ripples programmatic sales of XRP coins to retail investors through crypto exchanges did not break federal securities laws.
However, Terrett put out a disclaimer saying that she is not a lawyer and that the statement made is based on her thoughts and is not certain. “But I say that while wearing my “I’m not a lawyer” t-shirt,” she wrote.
Bone of Contention in July 2023 Ruling
The July 2023 ruling brought mixed reactions between the SEC and Ripple Labs. The decision which Ripple celebrated as a partial win over the SEC did not bring much clarity to the classification of other cryptocurrencies.
One of the points of argument was if it was required to use a written contract under the Howey test to check if an asset would be classified as a security. Ripple argues that a written contract is necessary to classify XRP as a security. The SEC does not agree with this position and may likely challenge it in an appeal.
The outcome of the Ripple vs SEC case has a broader influence on the global crypto industry as it could set a precedent for the classification and regulation of cryptocurrencies in the country.
Meanwhile, the initial momentum observed by the price of XRP appears to have waned off. At the time of writing, the coin declined by 1.44% to trade at $0.602.
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