The SEC may not be able to protect investors even if it wins the appeal.
Ripple may challenge the SEC's authority over the cryptocurrency market.
Leadership changes at the SEC could accelerate legal outcomes.
The U.S. Securities and Exchange Commission has opened an investigation into a recent ruling regarding the XRP token. Legal expert Hogan offers insights into the implications of this lawsuit. His analysis suggests that this legal move could reshape the terms of cryptocurrency regulation in the United States.
SEC Appeal: A Risky Decision
Hogan argues that the SEC’s choice to appeal the ruling on the software sales could be a big mistake. If the SEC wins, it could make more money from Ripple but it may not protect investors in any meaningful way. Ripple could therefore use this situation to challenge the SEC’s authority through a Blue Sky Act case.
A Ripple victory could diminish the SEC’s power over the broader digital goods industry. Moreover, Hogan argues that this appeal is a legal right. A trial judge cannot dismiss it, which sets it apart from previous SEC attempts to appeal.
Possibility of losing the SEC
Hogan believes the SEC is likely to lose the appeal based on statistical trends. The previous judge’s ruling was largely fact-based, which supports his prediction. Even if the SEC wins, Hogan believes the outcome will mostly involve financial aspects. As such, there will be little change in Ripple’s status or use of XRP.
Additionally, the timeline for this appeal plays a crucial role in the process. The SEC is expected to clarify the specific issues it will challenge in the coming weeks. After that, the agency must file its first brief by mid-December. The SEC cannot appeal a ruling that states “XRP is not a security.” This limitation will direct the focus toward whether the appeal will address the earlier injunction.
Effects of Leadership Changes
Hogan points to the unusual timing of Grewal’s departure from the SEC. It happened on the same day the appeal was filed. Such timing raises questions about the future direction of the SEC. Leadership changes at the SEC could have a significant impact on how the agency handles ongoing cases like Ripple. New leadership could accelerate resolution and change regulatory strategies.
